Shulou(Shulou.com)06/03 Report--

Mainstream insurance companies and technology giants gathered to discuss the use of blockchain to promote the digital transformation of the insurance industry. While the $5.5 trillion insurance market is fiercely competitive, when it comes to adopting blockchain technology or distributed ledger technology, insurance companies such as Swiss Re, Zurich Insurance and Dutch Global Life Insurance have chosen to cooperate and share services instead of competing.

Alliance models are a good choice for exploring management understanding, popular technologies, and rapid prototyping of cases and hundreds of insurance-based proof-of-concept.

In 2017, many mainstream insurers experienced losses due to factors such as interest rates and volatile risk environments. The way based on blockchain system technology is mainly reflected in the background function and operation efficiency, which can help insurance companies save 30% of the cost.

The key to digital transformation is addressing global protection gaps, where potential short-term insurance losses in the private sector are passed on to taxpayers, households and businesses. B3i said new premium growth in the insurance industry could reach $700 billion through digital transformation.

To some extent, however, the Alliance's approach may impede more fundamental shifts in the insurance industry's business model and the important social role that insurance plays in increasing people's resilience to natural and emerging risks.

Part of the core challenge for insurers if they make the digital transition is to run into skepticism from quarterly investors who want to stay the same or focus only on the short term. But if current practices remain unchanged, many businesses and delivery methods are not economically viable.

In many mature industries, the real breakthroughs come from unaligned outsiders. Startups and industry upstarts understand the basic attributes of an industry (insurance has four key elements: rules, compliance, ethics, and imagination) and clearly know how to change and reorder around the technology center rather than the edge.

Big companies are different from emerging accelerators. Ford Motor Company, for example, is the founder of the modern automobile industry, while Elon Musk is like an accelerator. Tesla has reached Ford's market value despite Ford's 100-year lead.

Many aspects of the insurance value chain are vulnerable to disruption, and for many new entrants, decentralized autonomous structures rather than marginal efficiency gains are central to strategy.

These ongoing changes in insurance aren't driven solely by emerging technologies, because confidence and insurance utility are clearly weakening. In 2017, a significant proportion of claims remained unpaid or pending settlement and third-party confirmation.

Other factors accelerating the process of digital transformation in the insurance industry are the emergence of major companies such as Amazon, Berkshire Hathaway and JPMorgan Chase, which have joined forces to pull more than 1 million employees out of the private health insurance market. Arguably, it breaks up a market that desperately needs efficiency, transparency and improved customer outcomes.

A coalition model applied by a very powerful troika has also been echoed by start-ups and venture capital. In Nashville, the first city in healthcare, companies like Brios launched a healthcare tokenization initiative that, along with the launch of Health: Further Events, attracted more than 2500 healthcare investors and innovators focused on driving digital transformation in healthcare.

In every way, insurance companies have been exposed to emerging technologies, whether in health care, life, non-life, or other parts of the value chain. Battered by the high regulatory burden of state-level regulation in the United States, barriers to customer exit and transition are low, and zero-sum capital strategies win everything with minimal cost and risk.

In addition to these trends, there is a convergence effect in terms of limited policies and coverage. Financial apathy among the biggest traditional insurance buyers is growing.

Therefore, the transition is all the more urgent.

With the support of the World Bank Group, identifying financing gaps related to finance and insurance is critical in achieving the United Nations Sustainable Development Goals (SDGs), and the role of insurance is directly linked to these issues.

Indeed, if the world wants to mitigate the causes of global instability, insurers are particularly vulnerable, suffering from the double whammy of risk and reward in their asset-liability management activities.

Ironically, for an insurance industry that has been around for more than 330 years, embracing cryptocurrencies and blockchain systems doesn't bode well for product innovation, market relevance, and finding competitive risk-adjusted returns. A trillion-dollar asset class emerged in 2017 without a centralized authority or insurance floor, which does not bode well for insurance adoption in emerging markets either.

For insurance to return to its roots as a catalyst for business and innovation, more insurers will need to play a leading role in emerging and business models.

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