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.