For this week's episode, we’re once again connecting with Christopher G. McDaniel the President of The Institute RiskStream Collaborative. In this episode, Christopher gives us an insight into the concept called risk singularity. We discuss the 3 phases that he envisions will preclude the risk singularity and what it means for insurers.

 

https://youtu.be/WMqMUPkpVfM

 

What is blockchain?

Christopher defines blockchain as a mechanism where information can be shared between different parties who without this mechanism wouldn’t normally trust each other. What this gives each of these parties is a trusted mechanism. Once widespread, they’ll be no need for information to travel back and forth between different parties. Through this mechanism, everybody in the network will now have the data ubiquitously. When this data no longer needs to be transacted between different parties continually it opens up new possibilities for insurers.

 

The Institute RiskStream Collaborative

The Institute RiskStream Collaborative is a non-profit consortium. It’s a collaboration of close to 50 members, made up of some of the largest insurance carriers and reinsurers globally. The goal is to build real-world applications and use cases using emerging technology

 

Risk singularity

So what’s meant by the risk singularity? First, the term technology singularity was made prominent by Sci-Fi writer Verner Vinge who in 1993 predicted that within thirty years, we will have the technological means to create superhuman intelligence and Ray Kurzweil through his book entitled ‘The Singularity is Near’. The term refers to a hypothetical point in time where technology advances to a tipping point and past that point technological growth becomes unpredictable and irreversible. Christopher defines risk singularity means that we get to a point where data, intelligence and process transformation have become so advance that the risk management industry undergoes a dramatic and irreversible change.

 

The impact of risk singularity to insurers

Over the next 15 to 20 years Christopher believes the following

* There’ll be a shift in that the majority of data will come to the company externally as adverse to what’s happening now where the majority of data comes from internal sources such as actuarial tables.

* It'll mean that insurers aren’t the ones to own individual’s data. Christopher envisions that eventually the individual will own their data on the personal lines side of insurance companies and individual’s will choose if they share it.

* If risk singularity occurs and data comes from external sources Christopher foresees more of a blurring of insurance business lines. Today everything in the industry is very siloed. Life insurance is siloed. Car insurance is siloed as are commercial lines. When data is available from numerous different external sources, new solutions will emerge that will cut across different insurance sectors and geographies.

* Solutions could be provided by any insurer worldwide as long as they’re in the network. According to Insurance Business UK based on the metric of net premiums written (NPW) in 2019 UnitedHealth Group based in A...