Turlough O’Brien is Head of IT at Aviva Commercial and Aviva UK Blockchain advocate. In this podcast we discuss Aviva’s perspective and lessons learnt with blockchain technology. Aviva is the largest insurer in the UK. It’s a composite that spans right away from car insurance through to equity release products.

 

What is blockchain?

Turlough defines blockchain as a mechanism for creating trust between peers in a distributed manner as opposed to today’s existing centralized trust models. From a technical perspective blockchain is a ledger of blocks. A block is comparable to a digital fingerprint or a unique representation of a piece of data, often a transaction. Once a new block is validated, it is then added to the ledger and cryptographically linked to the previous block. This creates the chain, which is then propagated across the network. This ensures that everyone on the network has confidence in the integrity of the chain.

 

Aviva and blockchain

sAviva Ventures do a lot in terms of investing in start-ups having come through Founders Factory such as the recent investment in Acre which aims to streamline the UK mortgage, insurance and conveyancing process using blockchain.

Throughout 2017 and 2018 Aviva completed three pilots within the broader company:

* a pilot to automate large parts of the supplier invoicing process within supply chains

* an Insurance Claims Fraud Detection pilot and

* an automatic property lease renewal pilot using smart contracts.

Moving beyond the pilots, Aviva continue to remain vigilant of the emerging opportunities with DLT. Aviva has an active working committee led by their group Chief Data architect to assess and triage opportunities coming through.

However, the focus has shifted onto consortia, whereby throughout 2019 Aviva has been actively involved in the consortia space and joined B3i.

 

Joining a consortium

One of the things that Aviva learned from its pilots was the value of the network and having the participants on the network.

The decision to join B3i was predicated on the network effect, meaning that the value of a blockchain-powered solutions increases as the number of participants using the solution increases and so it was a realisation of the value of the network and not the technology.

The rational being that the technology is not as much a challenge as participation on the blockchain, to quote John Carolin “Blockchain should be viewed as a team sport”.  Consequently there is a lot of value in the consortia versus the technology and having all participants in the insurance value chain on the blockchain is key.

We only have to look at the numerous attempts to modernise the insurance industry which failed to gain traction owing to the lack of adoption. From a commercial insurance perspective B3i probably has the broadest coverage of participation across the insurance value chain on the network. They spent a lot of time on engagement and building the network. It’s also a way of avoiding the “technology looking for a problem” scenario as the participants are required to realise the emerging business use cases.

 

When will blockchain be widely adopted in the insurance industry?

For Turlough that’s the million dollar question. He believes that it is hard to gauge and that from a technical perspective, it's very tricky. Bearing in mind that technology that has been around for a long time such as EDI and XML messaging, API’s and mainframes are still active in insurance so it’s hard to gauge exactly when blockchain will become prevalent in insurance.