Mark McLaughlin is IBM’s Global Insurance Director, leading IBM’s Global Insurance strategy, solutions, and partnerships.  Mark’s teams analyse trends in the insurance business and in technology, predict strategies for insurers, and build IBM insurance solutions to meet insurer needs. In this podcast we discuss the challenges and opportunities of blockchain in the insurance industry with special insights from IBM.

 
What is blockchain?
For Mark blockchain is a trusted shared ledger. It enables business entities with different interest and different goals, that may not 100% trust each other, to establish a common ground where a set of documents, processes and data is maintained by a group across a business network.

It is maintained in a way that is immutable where everybody can see the changes that are going on and where everybody has a record of it. Blockchain also have features like smart contracts that can help automate business processes in a trusted manner by all participants.

Mark points out that there are a lot of different things you can do with blockchain from digital currencies to running shared business processes.

 
How has insurance embraced blockchain technology?
Mark believes insurers are feeling the heat on innovation due to the 46% CAGR on Insuretech investment and the entry of large players like Ping An and Amazon into online distributed type insurance ventures.

Insurance being baked into other industries such as the purchase of an airline ticket in the US now comes with the offer of travel insurance as part of the process.

The insurance industry knows that they have to figure out ways to connect to broader ecosystems and to innovate. Blockchain is one way of doing that. Whilst insurers have a high level of interest in blockchain they have had a little trouble getting started in some cases.

Blockchain has great potential as a technology and an increasing number of insurers are willing to embrace it. The challenge however is with the business model. Other technologies such as AI (artificial intelligence) do not have the same challenge. AI is very easy to visualise, it can be used to better process a claim, underwrite a risk and advise an insured.

Blockchain is a little tougher. The challenge isn’t the tech it’s the use case behind the technology. Insurers who have been successful at using blockchain are those who have correctly defined the business value. It is however a very tricky exercise because blockchain is about creating networks and you have to ensure that the value line up across all the players within that network.

 
Digitising business during COVID
There is a tonne of complexities in the insurance industry and people tend to stick to the process they know because they know how to manage the complexities within that process.

However, some forward-thinking companies have during this COVID world looked at digital interactions and how they can rethink their business to leverage new technologies. For Mark, It is about “how do I build better interactions with my end user? How do I get closer to risk? How do I do a better job of providing personalised and customised advice around that risk? How do I connect relevant products and services at the point of risk?” Insurers that can figure that out and do that at scale will be the most successful ones in the future.

 
Approaches to innovation and blockchain
Too often insurers judge innovation in its ability to sell more of their existing products. The more successful insurers are those that think “Instead of how do I take my existing policies and my existing business and adapt th...