Blockchain started as a popular buzzword among techies but has since permeated across industries. In insurance, its potential is being realized as game changing. Truman Esmond, AAIS Vice President of Membership and Solutions, spoke at a recent webinar hosted by The Institutes Griffith Insurance Education Foundation on how AAIS is utilizing blockchain to support industry.
“Why blockchain was immediately interesting to us (at AAIS) is…it's an opportunity to perform our role in the industry much better as a specific data intermediary,” explained Mr. Esmond.
As a not-for-profit advisory organization, AAIS has a responsibility to both carriers and regulators to act as a neutral intermediary in presenting solutions that will benefit both parties. AAIS partnered with The Linux Foundation to develop its revolutionary data-sharing blockchain network, openIDL. The main idea: streamline data sharing between carriers and regulators, while also enabling data to remain private.
“We are working with regulators directly as well as our Member carriers to solve this specific problem of how do we solve the regulatory information problem while keeping proprietary data, private, and in control of those reporting, but keep an accountable trustable network from which we can build,” Mr. Esmond said during the webinar.
Take California wildfires for example. It has become increasingly more difficult to assess risk for homes and businesses in areas hard-hit by wildfires. However, California’s Department of Insurance has data that can be leveraged by carriers to help understand the risk better, ultimately to the benefit of the end customer – insureds. However, this data must be transferred in a private manner and handled with care. That is where the blockchain technology comes into play.
“The state can then take the robust information they have gathered about wildfires and let the (insurance) industry leverage it to collaborate better on the solution for risk,” Mr. Esmond commented. “It allows the data owner, whoever that may be, (to maintain) privacy and control. It allows the information seeker, transparency and objectivity and the infrastructure for the governance to establish how far we're going to trust that network, and what we're going to then trust it for.”
As more regulators and carriers get on board, openIDL’s open-source network becomes more valuable in real-time.
“What if we can reach further into the infrastructure…on a weekly basis or a daily basis or an up-to-the-minute basis,” Esmond continued. “Then we can agree that the information is present.”
One thing is for certain – the consensus among those invested in the idea of blockchain is that it can shape the insurance industry for years to come.
“I hope so,” Mr. Esmond responded when asked if he saw a prominent future for blockchain in the short-term. “I'm continuously impressed by the speed at which we are able to move, but anything big takes time.”
Watch the entire webinar with Truman Esmond, Patrick Schmid, VP, The Institutes RiskStream Collaborative and Frank Tomasello, Executive Director, The Institutes Griffith Insurance Education Foundation, by clicking here.