It is widely recognised that there is a growing trust deficit in our societies’ institutions, particularly in insurance. This isn’t confined solely to the question of claims on whether or not an insurance company will pay out or whether the insured is trying to defraud the insurance company. To help guide us through those issues and explain how blockchain can help restore trust we were privileged to have Dante Disparte Founder and CEO of Risk Cooperative, live from Washington DC on our show.

 

2 Minute Definition of Blockchain

If the internet created a world of low friction communication, blockchain is creating a world of low friction transfer. How it works is by storing and decentralising information on anything from transactions to supply chain interactions. Blockchain is a way of scaling trust without having to have a centralised authority and providing transparency with high levels of confidence in those types of exchanges.

 

The Blockchain Journey

Through a friend and colleague, Dr. Tomicah Tillemann, who runs the Bretton Woods II initiative, Dante was invited to the first ever global blockchain business council event during the annual Berkshire Hathaway shareholders meeting in Omaha. That one meeting led him to become an early mover in the insurance and blockchain community. That evolved into going to Nectar Island for the Third Blockchain Summit, hosted by Sir Richard Branson and BitFury, and most recently to Davos where Dante saw that blockchain was moving out of beta. It is important to recognise the importance of bitcoin and other cryptocurrencies in pushing blockchain out of beta on the world stage, through international corporation between individuals without central institutions.

 

Insurance, the very first blockchain sector?

When you look back at the history of insurance you quickly realise that it hinges on the concept of upmost good faith and mutualisation. The Lloyd’s market works by syndicating risk and syndicating trust. That engine works right now but what blockchain provides us with, is the opportunity to enhance this engine of syndication and trust onto a massively scalable platform. In it you can code in the behaviours, the conduct, the trust and you can remove friction, opacity, asymmetry, and agency issues that weigh down our industry. Because of those reasons Insurance can be the winners of that digital transformation.

 

Declining trust, a blockchain opportunity?

What underpins a currency, an insurance policy, or democracy is the expectation, in a binary manner, that if I voted for you it is counted, if a have a dollar bill it has a value, and in the insurance example that if I have a, a million dollar life insurance interest for my beneficiaries it is paid out when I pass away. This is critical because the user isn’t around to use it and there is no way of enforcing that trust in an environment that isn’t transparent where there are huge asymmetries of information.

The trust deficit is one of the biggest market drivers as to why blockchain is coming out of market beta. You see it everywhere, from where it is measured in the Edeleman Trust Barometer which shows a mark decline in trust in public and private institutions. You can see this in our streets and in our ballot boxes in some really profound ways.