Blockchain is a term you may have come across, but few can explain exactly what this technology can do and its impact on industries such as insurance. Here Caitriona Somers sets out the key points those in our industry should be aware of.
Blockchain technology and its potential first attracted my interest over 12 months ago. Since then, there has been a lot more conversation on the topic and now hardly a week goes by without an announcement of another Blockchain conference. A common theme to emerge is that the world of insurance should take note, as this technology has the potential to disrupt insurance design, pricing, distribution and administration.
Technology is breaking down industry borders as IT giants, established firms and innovative startups introduce solutions with the potential to disrupt the way we operate and the way work is performed and managed. In addition, the nature of talent and skills required, as well as the way technology supports those who work in our industry, is changing. In this environment it is important that organisations and their leaders are aware and develop an understanding of any such technology and reflect this in the digital strategy for their business.
This article seeks to explain – in a non-technical way for those who are not immersed in the digital world – what we should be aware of and need to consider in relation to Blockchain.
Explainer: What is Blockchain?
Advances in electrical science in the late 19th century had a significant impact on ways of working; yet most of the working population did not need to understand the technicalities of this to gain advantage for their business. In the same way I do not believe there is a need for most in insurance to develop a detailed knowledge of technology. Nonetheless, it is important that we understand its features and capabilities to develop an appreciation of how it can help to improve our business to meet evolving customers’ needs.
Simply put, Blockchain is the technology behind the Bitcoin currency. The internet is a repository of information that can be easily accessed and passed on; so it can be labelled as the internet of information. Blockchain has been described as the internet of value. It is a repository recording transactions relating to items of value (money, property, contracts etc) which is easily accessed and passed on. The technology records transactions between users on a decentralised network, forming a chain that is endless, unbreakable and shared.
Personally if I were to visualise Blockchain, it would be a tower of Lego bricks that keeps growing. Each brick is a legally valid record of a transaction or contract term, which is a permanent part of the tower, cannot be removed and is visible to everyone who has access to the tower. In summary, it is an underlying technology which is a decentralised, peer to peer network and acts as a modern time machine, permanently and immutably recording all transactions happening over time.
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Don't miss Caitriona Somers' lecture in our Autumn/Winter CPD Series, where she will discuss Blockchain and the implications for insurers in more detail – find out more →