March 13, 2019 Articles

Blockchain Is Coming and So Are Insurance Coverage Challenges and Opportunities

As blockchain becomes more common in usage, risks and resulting losses will become more reality than theory, and demands for coverage of those risks and losses will rise.

by James S. Gkonos and Laurie A. Kamaiko

Blockchain is one of the new darlings of the insurance industry. Proponents of blockchain technology believe that it can affect nearly every aspect of the insurance industry: underwriting, distribution, administration, and claims. The industry is still somewhat unsure of the impact of the technology, but its usage is spreading and there is increasing acceptance that it will be part of the future operations of both insurers and companies they insure. A recent Deloitte study of 300 U.S. executives revealed that 28 percent had invested at least $5 million in blockchain technology, 10 percent had invested at least $10 million, but 39 percent had no understanding of the technology. 1 A PriceWaterhouseCoopers survey of the financial services industry, including the insurance industry, showed that over 50 percent of financial services executives believed blockchain was important, but were not sure how to use it, and 68 percent of insurance executives in 2018 expected to adopt blockchain as part of an in-production system.2

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