There have been many obstacles in solving data and technology issues across the insurance ecosystem and other industries have raised their game with an open-source mindset. In the AAIS Pulse session, Open-Source Solutions for Today’s Insurance Challenges, host Joan Zerkovich, Senior Vice President of Operations at AAIS, led a discussion with Daniela Barbosa, General Manager of Blockchain and Identity at The Linux Foundation and Executive Director of the Hyperledger Foundation, and Hart Montgomery, CTO at the Hyperledger Foundation, to explore what insurance challenges could be addressed in an open-source environment. They examined how initiatives like openIDL are different from past efforts in the industry and how carriers and other stakeholders get involved in leveraging these technologies to define the future of information-sharing in insurance.

Failed Efforts Between Data/Technology and Insurance Industries

Montgomery admitted it can be difficult for some insurance companies who don't have as much experience collaborating to find ways to participate. He did share, "There are a lot of areas where it can be synergistic for everyone in a field, even competitors, to work together to collaborate to build something,” he said.

Barbosa believes when both industries are planning to work together, it is helpful to look at other industry projects from both a technology and a governance perspective. “There is a strong ecosystem of vendors supporting the technology already, that have many years of running these networks and being able to administer these networks,” she said. “But when you think about how the governance of these networks is set up, many of these past projects failed because there was no way for the participants to understand and be part of the governance models.”

Montgomery agreed with Barbosa, sharing, “Fundamentally, a blockchain is just a distributed database with decentralized trust. It's a database with these fancy decentralization properties. A lot of the time when we see blockchain or distributed ledger projects fail, it's because they have centralized governance, where there's really one entity and control. The blockchains that we do see succeed often has proper decentralization and proper decentralized governance.”

Barbosa believes a solution to enable more collaboration between the industries starts with inclusivity. “[The technology] needs to be inclusive so that organizations in the private and public sectors can understand how to participate, how to join the networks, and how to drive their business use cases within those networks as well.”

Benefits of Open-Source Blockchain Networks to the Insurance Ecosystem

Decentralization is extremely powerful. Montgomery believes we're just scratching the surface in terms of what can be done with respect to querying data in a private and secure way. “Zero-knowledge proofs on blockchains are really just starting to take off,” he reported. “I expect that in the future we’ll be able to submit an encrypted transaction to say, a regulator, that follows some policy, and we won't even need to show the regulator the data in the clear.”

Barbosa thinks that while it may not be realized now, blockchain can help improve the customer experience for insurance companies. “Consumers won't care what technologies are behind [the services], they just want to understand and have a better experience,” she shared. “So, I think it's always very important to keep in mind that these technologies are for the purpose of having a better experience with the consumers at the consumer level from an insurance perspective.”

Zerkovich commented that blockchain networks, specifically openIDL, offer the ability to link together types of information that are generally not possible because of security and privacy issues. “By leaving the data that, for example, a carrier has during a weather catastrophe, securely in the openIDL node, we are now increasingly seeing third parties that are able to take images at an individual address level because the emergency services need it,” she stated. “That ensures a number of clients are able to show the images of what happened to that property right away to somebody who might not be local to where the weather catastrophe hit.” In the past, Zerkovich explained that data would be gathered and sent out to link together with other data after the fact. “By having this data available on the network all the time, we're able to link data together very quickly for a catastrophe response or some other type of information query that we didn't see coming,” she said. This is ultimately important for carriers in terms of serving their customers.

How to Get Involved With openIDL

openIDL is the first industry open-source network that provides a secure permission-based distributed ledger. It is a data-sharing platform between insurance carriers, regulators, and stakeholders. The goal is to have increased operational efficiency, a high level of data security, and transparency.

Joining openIDL is simple, according to Barbosa. “Carriers and other stakeholders who are already members of the Linux Foundation can join the openIDL network. Our membership fees are based on the number of full-time employees that organizations have, which allows equal access for all members,” she explained. “If you're not a member of the Linux Foundation, [joining] comes with a lot of different benefits around open-source strategy for your organization. We are an open community – there are opportunities for you to come in and listen, participate, and meet with other participants in openIDL, as well as staff.”

AAIS also has an All-Access membership model, which includes membership in openIDL and the Linux Foundation.

To view the entire discussion with Joan Zerkovich, Daniela Barbosa, and Hart Montgomery, click on the video above.