RiskBlock Alliance

This week’s Insureblock’s episode takes us to Pennsylvania, USA, where we had the chance to interview Christopher McDaniel,  President of the RiskBlock Alliance; an industry-led consortium that collaborates to unlock the potential of blockchain across the insurance industry.

 

2 Minute Definition of Blockchain

For Chris, there are three fundamentals to blockchain:

  • Ubiquitous data – all data is synchronised between the participants behind the scenes.
  • Immutable – data cannot be erased. It is a perfect audit trail with a one source of truce for the participants using the blockchain.
  • Smart contracts – the capability of saying if a situation exists do something on the blockchain. It is a way of automating different processes that may exist on the blockchain.

 

What is the RiskBlock Alliance

The Institute is an organisation that has been around for a hundred years in the property and casualty space. It provides education and research in that space. 18 months ago, the board of the Institute tasked the RiskBlock Alliances with:

  • Proof of concept – could blockchain be used in the insurance space
  • Proof of collaboration – can we get competing firms to work together around a common goal

By June 2017, four proof of concepts were set up with over 40 insurance entities collaborating together, leading to the formation of the RiskBlock Alliance.

In Chris’ opinion, one of the smartest things that the RiskBlock Alliance did was instead of jumping into the deep end of the pool was taking 12 weeks to really define what the RiskBlock Alliance was going to be and what value it will bring to its members. They created a consortium of insurance carriers, reinsurance and brokers to build a blockchain framework with multiple use cases on top of it. The framework is really key, as it is the first truly enterprise friendly reusable blockchain framework.

 

Why use blockchain?

Prior to the RiskBlock Alliance one of the Institute’s members built a Proof of Concept for a compelling need in the insurance industry and tried to get the rest of their peers / competitors to join in. They received a lot of pushback from their competitors. RiskBlock being an independent trusted source was able to bring that exact same solution with the participation of all its members in the roll out of that particular use case. Blockchain is a “team sport”. If you are doing something that is individual to your organisation there are more likely better solutions out there than blockchain. However if you are looking to join together different entities and competitors and want to have them share information in an ubiquitous, secure and real time manner, then blockchain is the best solution for that.

 

Getting competing entities to work together

Everyone seems to think that they have the secret sauce. In one example of a use case need around subrogation – the process between 2 insurance firms who are involved in an auto accident (for example) with a need to negotiate a final financial settlement. Arbitration may be involved and it’s a very painful manual process. By creating a blockchain solution you can automate that process and create efficiencies for all parties. Effectively the way to getting competitors to work together is by ensuring that the value they get is greater than their competitive fears.

 

Building a truly digital process

80% of blockchain use case are in the efficiency area. 20% is in new products, new channels, new ways of doing things. Most of the low hanging fruits is around those efficiency gains. With efficiency gains comes process improvement needs. To maximise on the full efficiency gains of blockchain, insurance companies also need to ensure that not only do they input data onto the blockchain but that their back end systems are upgraded from a manual to automated ones.

 

How does the RiskBlock Alliance compare to other consortiums like R3 and B3i?

RiskBlock Alliance is a non-profit organisation, which really sets them apart. They have a no-science project edit. They don’t build proof of concepts or stand-alone projects. They build real production value use cases on a standardised blockchain framework. Their technology is a key differentiator, its reusable framework ensures that they don’t continuously reinvent the wheel. They have one policy blockchain, one clients claim blockchain, one underwriter blockchain for multiple use cases that can run on top of that blockchain framework. In Chris’ opinion that really sets them apart from all other parties in the insurance and financial industry. He believes they are the first ones to be using that reusable blockchain framework.

 

Example of a blockchain project

With Nationwide they did a proof of insurance project for personal auto. When two individuals get into a car accident, they can open up the mobile app which has a plugin that allows them to tap their phone together. When they do that it goes out to the blockchain in order to exchange insurance policy details between the participants on a real time basis. What is interesting is that, like other blockchain projects the RiskBlock Alliance works on, this use case of personal auto has become a category where they can use that same core technology for other projects.

 

What’s next for the RiskBlock Alliance blockchain framework?

Blockchain as a foundation is key, however as you move further into the future you can start enhancing the blockchain framework with hooks for their members to do analytics, integration to IoT (internet of things), and other future technologies. The framework is ultimately a foundation for all of these future set technologies.

 

Your Turn!

Chris shares many other insights points in this podcast on exciting opportunities blockchain can have with IoT and also he talks about what’s next for the RiskBlock Alliance. If you liked the podcast please do review it on iTunes. If you have any comments, suggestions on how we could make it better please don’t hesitate to add a comment below. If you’d like to ask a question to Chris feel free to add a comment below and will get him over to our site to answer your questions.

 

Thanks again Chris!

 

Meet Chris at the Blockchain for Insurance Summit

On the 22nd of May, Chris will be in London at the Blockchain for Insurance Summit. You can attend this event with our 30% discount voucher: 9700INS30

Spread the love

Leave a Reply

Your email address will not be published.