When most of us hear the word “blockchain,” we think about cryptocurrencies like Bitcoin.
But could blockchain Technology be used to enhance insurance processes?
Tram Vo, CEO and founder of Mobility Open Blockchain Initiative (MOBI), sees the appeal.
MOBI is a nonprofit consortium that is creating standards and building a Web3 infrastructure for connected ecosystems and internet of things commerce. In a nutshell, this means the group is utilizing modern technological advances – including blockchains, smart devices, cloud computing and machine learning – to drive the creation of new business models.
Earlier this week, Vo spoke with Joan Zerkovich, the senior vice president of operations for the American Association of Insurance Services, during the AAIS Pulse Chicago event.
“Although the word blockchain is in our name, we think of it just as one tool among many in our toolbox,” Vo said. “So, the convergence of all the Technology that you see here will come together and will give any connected entity a trusted identity and enable them to be able to securely communicate and transact with each other without having to go through a centralized platform like Google or Facebook, for example.”
This is a key tenet of blockchain Technology. Blockchains operate on decentralized networks – a different model than the centralized databases that have commonly stored data for years. The latter are costly and susceptible to cyberattacks that can result in huge losses. Meanwhile, decentralized networks could enable companies to securely tap into data in new ways without risking the loss of any major personal identifiable information.
In one example, Vo shared how built-in telematics information stored on vehicles has been underutilized because companies are afraid of what could happen if that data is sent around.
“GM, On-Star – all that data is still sitting somewhere,” she shared, “with a lot of data not being used. And if you can use that data, that would be incredible.”
Vo spoke of how companies such as State Farm and Swiss Re are “very interested in usage-based insurance.” (Both companies are part of MOBI working groups.) While vehicles most of the time sit parked at homes, policyholders don’t want to pay insurance if they’re not using their cars. And insurance companies are taking note.
“So, certainly MOBI, with its unique digital identifiers and a network that helps you find things and get information about those things, will be of huge benefit to the insurance industry,” Zerkovich said.
“Think of it (like), we’re building, essentially, a network of roads and highways,” Vo said. “And then on that, you can use that to directly communicate with somebody, and be able to exchange credentials and be able to do business.”
She continued: “Think of us not building any databases. We’re just building the infrastructure for you to communicate in the way that preserves data privacy for the user and the provider and interoperability by using the internet.”
Near the end of the presentation, Zerkovich shared that, “the real point here is that you can’t wait until the system is built to really take advantage of it, or to make sure that it works for your business. Involving your company today is really to ensure that you’re up to speed, you know how to leverage this new Technology and it was molded in a way that fits your business.”
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