Insureblocks

In this podcast we are joined by Kevin Leuthardt who wrote an interesting article on this subject earlier this year where he analyses the use of governance from a business network layer, protocol layer and data layer for scaling blockchain consortia.

Kevin Leuthardt is the cofounder of KSquared which works with start-ups across industries and technologies. He is a tax lawyer and is involved in the European Blockchain Association within the Governance Working Group.

 

What is blockchain?

Kevin sees blockchain as a foundational technology. From a technical standpoint it’s a shared synchronised data ledger which is encrypted and comes with the potential of disintermediation, automation and providing a single source of truth. Automation comes through the use of smart contracts.

What Kevin finds the most exciting about blockchain is that it brings about the so called competition paradox where competitors can work together to unlock new opportunities.

 

The article - Successful scaling of blockchain consortia through governance

On the 16thof January, Kevin wrote an article entitled “Successful scaling of blockchain consortia through governance”.

Whilst working on a project around withholding tax refund on a DLT project, Kevin realised the importance governance had in the successful deployment of a blockchain consortium or an enterprise blockchain project.

 

What is governance?

Governance is a term which encompasses organisational, legal and economic reflections or considerations. Governance within a business network like enterprise blockchain is a set of rules, values and a set of incentives by which participants agree to operate within an ecosystem. If is a rulebook which is here to manage key situations or events:

* Such as what to do in certain key situations such as the need to tweak a protocol.

* How to avoid a hard fork?

* Who owns the IP?

The ultimate goal of governance, within the competition paradox, is to enable and facilitate transparency and continuity of the network.

 

How to assess the governance of a blockchain consortia?

If you think about what’s actually a blockchain consortia, it’s essentially a set of companies which agree to collaborate in order to advance the state of blockchain. Within an industry it’s about establishing industry standards, use cases or build real commercial applications as is the case with B3i.

In order to analyse the governance of a blockchain consortia it requires to run an assessment of the anatomy of the distributed ledger application. Michel Rauchs, at the Cambridge Centre for Alternative Finance at Cambridge University, has published a conceptual framework on distributed ledger technology systems. It splits the anatomy of blockchain applications into three layers:

* Protocol layer - everything about the blockchain stack

* Network layer – details of the business network such as who can access the network, who can submit transactions and who validates the transactions

* Data layer – what happens on chain and what happens off chain, where does the application take data from, what Oracles to sue and also aspects of cybersecurity

Trent McConaghy grew up on a farm in rural Canada. He did AI research for 20 years including running 2 startups and a PhD. For the last 5 years he has been focused on blockchain and in particular on Ocean Protocol which he has co-founded.. Ocean Protocol is a protocol whose mission is to unlock data for the broad benefit of society. Data is becoming increasingly important and influential throughout the world, ensuring that the opportunities to access data are equalised is the aim of Ocean Protocol.

What is blockchain?

Blockchain at its heart is a technology, just as the internal combustion engine or a computer. The internal combustion engine combined with oil unlocked mobile transport in a big way. Similarly blockchain unloads a whole new set of possibilities that we haven’t seen before. At the very heart, it is simply a database. However its a database with very specific characteristics:

* Decentralised: no single entity owns or controls it

* Immutable

* Concept of ownership if you have the private key to it such as tokens for money like with Bitcoin

* Unlocks incentives – blockchain can be used to shape incentives for human behaviour

What is the data economy?

Trent looks at the token economy as the open version of the money economy. With the money economy we have tokens, currencies, etc. Traditionally these were distributed solely by national governments in opaque ways through the Fed and Central Banks. Whilst this has been beneficial in many ways there were still challenges. Bitcoin opened up the money economy by being permission less, friction free and fully open.

Today there is a data economy, but like the money economy it is very opaque where credit card companies are selling your data, Facebook buying data from 150 organisations to add it to its own data in order to sell you more adds. There already is a data economy where it’s a flow of value and participants in the economy are buying and selling data in a closed and opaque manner. Just as Bitcoin opened up the money economy, ocean is designed to open up the data economy.

 

AI, the last mile of data

Just like the internal combustion isn’t useful on its own nor is oil useful for its sake, both of them are useful towards machines that are then used for mobility. AI, is the last mile to unlock the value of data. Modern AI really loves data. The more data it receives the more accurate its models become which in turn can create business value. For example AI models used to predict cancer usually use data gathered from 100 individuals. These models can predict cancer from 6 months in or even from stage three. If those AI models were based on orders of magnitude of more data such as over millions of individuals then you could theoretically predict the existence of cancer 6 days into it from very early weak signals. Feeding large amounts of data into AI can help to unlock value and build new applications.

 

Components of the data economy

Three levels to both the open money economy and to the token economy:

* Base infrastructure (i.e. a store of value)

* Unit of exchange

* Platform to launch and to exchange things

The last mile on top of the platform are the applications.

In the token economy the de factor standard, the unit of exchange, that has emerged is Bitcoin. The platform is Ethereum. On top of the platform you have a set of decentralised applications, DAPPS, running on Ethereum, which represent the kind of last mile in terms of applications. In terms of financial side the last mile are Decentralised fi...

Najib Rehman, Data Strategy Lead, at FarmaTrust and Raja Sharif, CEO and Founder of FarmaTrust join us in this exciting podcast on how they use AI and blockchain technology in the pharmaceutical and healthcare industry to help resolve some of its problems.

 

What is blockchain?

Blockchain is essentially a database that is distributed for all relevant parties to have access and visibility. Where it differs from traditional databases is that it doesn’t have a sole controller. With blockchain if all the parties have an agreement, a consensus around what the distributed dataset looks liken, then it’s very difficult to game the system. Blockchain makes it easier to identify the bad actors.

 

Fraud & challenges in the pharmaceutical and healthcare industry

The World Health Organisation estimates that up to 700,000 people die every year due to complications caused by counterfeit Tuberculosis and Malaria vaccines. PWC estimates that counterfeit pharmaceutical is a $200bn annual business. This is quite a significant percentage of the $1.2 trillion pharmaceuticals global trade.

In the UK alone, the NHS is dealing with large amounts of waste within various hospital institutions such as how inventory is managed, how it’s being leveraged and used within each hospital by healthcare professionals or not being used. Due to the very nature of healthcare, hospitals can't afford not to have something on the shelf to treat a patient, as the consequences could be catastrophic for the patient. So, there is a large amount of excess stock that’s often floating and often sadly not used to ensure that patient safety and patient lives are the priority.

 

The World Health Organisation estimates that more than 50% of drugs sold online in the West is fake. In Europe the Falsified Medicines Directive and in the US the Drugs Supply Chain Security Act are both trying to address this challenge by stipulating that pharmaceutical companies need to have individual serialisation and digitisation of the packs of medicine. So, all packs in developed markets now have to have an individual identity that therefore makes the use of distributed ledger technology quite suitable for this challenge

Combination of AI and machine learning can help identify patterns to help healthcare professionals ensure that patients are treated but without the waste that we’re seeing today.

 

Data standards in healthcare

GS1 is a global data standard that is used across industries including in healthcare. It is a standard that is used for products for tracking and identification. These standards aren’t always adhered to. Companies and entities will create their own identifiers for a product which then conflicts. How to address this problem is an important question that needs to be addressed by companies,

Managers in enterprises or start-up founders all have to go through a framework in order to unlock the necessary investment for their blockchain projects. Understanding that process and what it entails is key. Areiel Wolanow is managing director of Finserv Experts, expert advisor to the All-Party Parliamentary Group on Blockchain amongst many other blockchain advisory and non-exec positions. In this podcast he takes us through the commonalities between successful and failed blockchain projects before building a framework for requesting investment for a blockchain project.

 

What is blockchain?

Blockchain is an enabling technology. It allows multiple separate legal parties to share a single version of data and keep that data in synch between themselves. Thus, removing the need to reconcile different versions of data between themselves.

 

Journey to blockchain

In early 2014, Areiel was running IBM’s financial services practice for East Africa based out of Nairobi. 90% of the Ethiopian commodity exchange is with coffee. The challenge that they faced was that the Fair Trade Association was threatening to remove accreditation across the country, because of the level of corruption. Virtually all coffee farmers in Ethiopia were calling themselves Fair Trade with only a tiny minority having actually gone through the process.

The Ethiopian commodity exchange had asked IBM if they could do an IOT based provenance solution. The idea was to give where farmers, who had gone through the Fair Trade process, the ability to purchase Fair Trade RFID tags to put in their coffee bags. Whilst this solution would help solve the problem from the farm side, the problem remerged when the coffee reached the roaster and ultimately the market floor. The Fair Trade coffee would get mixed with other coffees thus making the ability to trace provenance very difficult and easily gamed.

It became clear that considering these challenges that blockchain could be an excellent solution for nailing down the provenance, tracking the coffee throughout the various transactions all the way to the consumer scanning a QR code on their coffee bag and seeing their coffees journey.

 

Blockchain – addressing the “world’s oldest business requirement”

The above coffee example, or Everledger with diamonds, demonstrate how provenance is a powerful use case for blockchain.

Blockchain is an innovation that addresses what Areiel refers to as the “World’s oldest business requirement”. This is a requirement that goes back to 4,000 BC when humans were designing the very first contracts.

A bulla (or clay envelope) and its contents on display at the Louvre. Uruk period (4000 BC–3100 BC).

At that time Sumerians would record future commitments (eg. use of an Ox for bushels of grains) on a “bulla” a hollow ball-like clay that contained tokens that identified the quantity and types of goods being recorded. This ball would provide an independent verifiable tokenised representation of a contract. A bulla was at that time as transformative as the internet is today.

However, as the bulla becoming increasingly adopted it became difficult for individuals to remember how many tokens where inside each balls. This set an upper limit on scale of the bulla system. The next invention was creating indentations on the outside of the bulla to represent the number of tokens on the inside. These indentations eventually took the form of symbols to represent not just the number of tokens but the diff...

Jamie Burke is the founder & CEO of Outlier Ventures. He also is a pioneer of the “Convergence Thesis”, where blockchain is foundational to Web 3.0 a more decentralised and automated future.

In this podcast we discuss how we are starting to see the emergence of a “convergence ecosystem” that involves blockchain, AI, IOT, big data and robotics that will help to build new markets that are open-source, distributed, decentralised, automated and tokenised.

 

About Jamie Burke & Outlier Ventures

Jamie has a background in digital innovation and change management within large corporations. Prior to founding Outlier Ventures, Europe’s first blockchain venture platform he was an angel investor.

Founded in 2014, Outlier Ventures is a venture platform focused on building the infrastructure for the next phase of the Internet. Their investment philosophy is based around the idea of the Convergence Ecosystem. They view blockchains and other decentralised tools like tokens as a new data layer enabling other technologies like AI and IoT to combine and converge.

Outlier Ventures are the authors of - The Convergence Ecosystem

Source: Outlier Ventures

What is blockchain?

Blockchain is a catchall word which broadly represents distributed ledger technology (DLT). A blockchain is a very specific form of DLT. Jamie prefers defining what is DLT instead of blockchain as he finds the broader application of DLT in all of it different configurations more interesting. DLT can be broken down into three components:

* The ledger which is about ownership and the transfer of ownership in an auditable way, where the state of the ledger is governed by the network instead of a central party

* Digital scarcity: today a jpeg, a movie, a sound file can be replicated a number of times. The notion that something can be both digital and scarce is a new one and one that can be enabled by blockchain

* Smart contract gives you the ability to program rules into the ledger to carry our rudimentary “if then statements”. Whilst at the moment they are pretty dumb they have the potential for increased intelligence

What Jamie expects is that both at the ledger and at the smart contract layer, is an increase level of intelligence, which is why they’ve invested in a start-up called Fetch.ai.

 

What is the convergence ecosystem?

A little over 3 years ago, Outlier Ventures had spoken to over 1,500 blockchain start-ups, most of which would fail. Many of the challenges these start-ups faced was the lack of blockchain infrastructure (Eg. on Ethereum or on Bitcoin) thus making their use cases not quite possible.

It increasingly became apparent that DLT shouldn’t be looked at on its own, but how it can be used to look at IoT (Internet of Things) or AI (Artificial Intelligence) problems, preliminary predicated around data.

It was at this moment that the Outlier Ventures team decided to look at DLT’s ability to not only solve IoT problems, especially industrial IoT, and AI problems but actually all of these things combined and accelerated one another. For example the minute you solve for one problem such as securing an IoT and supply chain of IoT devices you can have provenance of devices and data all the way up to incentivizing the ability to unlock data marketplaces to train AI algorith...

Antony Elliott, is Chairman at B3i and Group Head of Business Transformation at Zurich Insurance.  In this podcast we discussed innovation in the insurance industry, blockchain as part of the new stack, but also what he feels were the lessons learnt at B3i and what his aspirations are for it. 

At Zurich Insurance, Antony is focused on making the organization more effective, efficient and customer centric. As he suggests, his role at B3i has a similar focus except at an industry-level. Thus, his dual roles allow him the ability to drive transformation at a group and industry-level; an opportunity few have!

 

What is blockchain?

According to Antony, blockchain is a tamper proof protocol that allows information to be shared across a distributed platform. From an insurance perspective, blockchain permits better allocation of capital to risks by allowing mutually distrusting parties to be part of the same network and extract benefits from referring to a single source of truth.

 

B3i from Antony’s perspective

B3i began as an industry roundtable to discuss blockchain and was eventually incorporated as a company in 2018 which is owned by seventeen insurance companies. The wider B3i community consists of 40 insurance entities including primary insurers, brokers and reinsurers. It's mantra is for the market by the market. The aim at B3i is to build protocols, standards and infrastructure to remove friction in risk transfer in order to better allocate capital to risks.

 

Antony’s journey

Passionate about transforming the insurance industry inside and outside of Zurich insurance.

Antony was introduced to the insurance industry during his early days on the graduate scheme at PwC back in 1999. His initial experience with insurance was in PwC’s assurance practices which involved audits and consultancy work.

He believed then (and does till date) that insurance is a social good. However, he continues to believe that there are ways to make insurance better for customers. Antony’s LinkedIn handle summarizes his vision as “passionate about transforming the insurance industry inside and outside of Zurich insurance.”

 

Innovation in insurance

Antony points out that the insurance industry has made substantial progress with regards to innovation over the past 5 years. The focus on innovation is gradually shifting from the product side to becoming centered around the customer. Antony makes an interesting remark that “line of business” (a phrase widely used in insurance companies) bears no relevance to the customer!

As of June 2019, Zurich has created the role of Chief Customer Officer - Conny Kalcher was recently appointed to this position. This role may be viewed as that of a customer advocate within the organization. Another area that the insurance industry is improving is with a focus on innovation and engagement with startups. In general insurance is pretty good at developing proof of concepts but have a harder time at scaling innovation. Zurich is attempting to do it differently and Antony proceeds to highlight some examples of incumbent engagement with technology recently. In particular, he mentions Zurich’s acquisition of Bright Box in December 2017. Bright Box focused on telematics for OEMs which augmented Zurich’s effort in the telematics-based motor insurance category. In March 2019, Zurich

On the 15th of May of this year, law firm Clyde & Co launched an off-the-shelf connected parametric insurance contract for use by insurers. In this episode, Walid catches up with Lee Bacon, partner at Clyde & Co and co-founder of Clyde Code.

Lee makes a repeat appearance to discuss connected contracts and Clyde Code, which is a consultancy unit focused on blockchain and smart contracts within Clyde & Co.  Lee highlights that insurance is a core focus of Clyde & Co and together with other partners at the firm, he began exploring blockchain in late 2015.

 

What is blockchain?

From a non-technical perspective, blockchain is a form of distributed ledger technology (DLT) which depending on its guises can be either a public permission-based system or for enterprises as a private kind of ring-fence system. It’s an enabling technology which enables parties to have access to the same data at the same time with an element of trust that the data is of the type and format that all parties can take comfort that they have the same information at the same time.

 

What is a connected contract?

“A smart contract is neither smart nor is it a contract, but it can be both.”

 

Lee highlights that the phrase “connected contracts” has been borrowed from Clause.io. A connected contract consists of a smart contract linked to a legal contract. A smart contract requires a trigger to execute a set of actions. In the case of connected contracts, the smart contract executes depending on trigger values defined in the legal contract.

 

Can smart contracts become law?

Lee points out that legal contracts and law are not the same - legal contracts are subject to the law. Just as legal contracts are subject to law, smart contracts are subject to the same law. He believes that smart contracts are capable of being legally binding.

 

Partnership with clause.io

Lee explains that connected contracts fall under the umbrella of smart contracts. Specifically, connected contracts offered by Clyde & Co are built on the clause.io platform since these contracts appear as a human readable contract instead of code.

Clause.io permits user input in words and transcribes these words into code for a machine to execute. Further, clause.io allows smart contracts to be connected to legal contracts.

 

Use case

The use-case explored was parametric insurance for a solar plant. This plant was under contractual obligation to supply a certain amount of energy per quarter – failure to do so would invite financial penalty.  Thus, this solar plant purchased (parametric) insurance cover to insure against adverse weather.

The claims trigger was more than 10 days of “adverse” weather conditions (per quarter) to generate electricity i.e. more than 10 such days per quarter would trigger a payment. A precise definition of “adverse” was provided in the supporting legal contract. This example illustrates how a connected contract (smart contract + legal contract) operates.

Further information regarding this use-case may be found here.

 

A note regarding parametric insurance in the UK

Lee points out that there is a fine line between parametric insurance and derivative con...

Shaun Crawford is the Global Vice Chair of Industry at EY and the chairman of Insurwave. It has been nearly a year since Insurwave has launched and since then it has won 8 industry awards. In this episode we discuss some of their exciting learnings from last year’s Insureblock’s podcast and their plans for the future.

 

What is blockchain?

In last year’s episode, Shaun gave us a technical definition of blockchain, this time he defines blockchain in a business optic. In the next few years we are going to see a 10x growth in volume of data produced due to 5G and IoT (internet of things) devices. To help manage all of this data from various sources, blockchain is the best technology to accomplish that. Blockchain can:

* Confirm the relevance, accuracy, accountability and authenticity of the data

* Ensure the data provenance of the data

* Provide reliability and security to the data

On the 25thof March, Shaun wrote a blog entitled, “Is 5G the missing piece in the corporate jigsaw” in which he discusses the enormous opportunity that 5G will bring in unlocking the potential for IoT

 

What is Insurwave?

Insurwave is effectively a pipe, that takes data from a shipping company, accessing that ton of data, finding relevance of that data, feeding it through to a broker, which then feeds into a reinsurer and a retro insurer in marine insurance. Basically, it brings capital closer to risk.

Insurers today are miles aware from where the actual risk is taken. Insurwave provides the relevant data to enable the insurer, the broker, and the reinsurer to come up with a better and effective product. This ultimately results in a much more effective business process.

 

Awards and more awards!

Since last summer Insurwave has won eight awards including the The Insurance Day Maritime Insurance Award. Shaun recognises that there are a lot of blockchain ideas, proof of concepts and promises for the future out in the market, in which a number of them will success. What Insurwave has achieved is that it has been live for 12 months now with Maersk. They have proven the worth of their core functionality and have built a lot more on top of it.

 

Evolution of the Insurwave team

When Insurwave first launched it had a small team – Maersk, one insurer, one reinsurer and one broker. Shaun stresses that their number one client has always been Maersk. Insurwave launched with basic functionality in July 2018 with Maersk but is now rolling out the full functionality for the whole hull and machinery by June 2019 for the next panel.

Insurance broker Miller’s has joined the Insurwave panel with a new reinsurer Gard and their retro panel. They are building out new nodes to accommodate for other shippers and brokers which they will be announcing in the near future.

 

Corda and technology platforms

Insurwave has used Corda open source to build its back-office platform and has built a lot of functionality in front end system technology as well. Shaun describes his experience of using Corda as being very good but for him the key is not so much about technology. The toughest challenge is about defining the right business process....

Patrick Schmid has a Phd in Economics and is the Vice President of RiskStream Collaborative (previously known as the RiskBlock Alliance). In this fascinating episode he provides an expert opinion and process for calculating ROI for blockchain applications. This is a must listen episode for anyone looking to develop blockchain solutions and need a functioning model to be able to calculate expected ROI.

 

What is blockchain?

Patrick proposed two definitions:

Formal definition

Blockchain is a distributed ledger that maintains a constantly growing list of chronologically added records in the form of blocks. Within each block the data (e.g. transactional data or smart contracts) is confirmed and verified through this decentralised consensus process. This process removes the need for an intermediary to be involved in verifying and confirming transactions. Therefore, it establishes trust without the usage of a centralised authority. This is why, blockchain is often referenced at the trust machine. It is the decentralisation of trust where the data was once stored in one location and the trust was provided by one party. With blockchain the data is broadcast to all parties within network and the entire community is providing the consensus through the protocol itself.

Informal definition

Blockchain basically meshes the network with database/distributed database/ledger through encryption to provide advancements in ecommerce or transactions, or computing via smart contracts.

 

What is the Institute & how did its blockchain initiative start?

The Institute is a 501c3 not-for-profit that was set up over a hundred years ago out of the Wharton School at the University of Pennsylvania. The Institute provides knowledge-based solutions with the goal to make the risk management, in the insurance industry, more efficient for industry participants and consumers.

The Institute came across blockchain through their existing research when Patrick was leading their enterprise research whose goal was to provide some market insights and trends. Some of the early trends coming out of this research was that the insurance industry was going to continue to undergo employment changes. For example, careers in analytics were going to continue growing whilst traditional careers were expected to either remain stagnant or shrink.

Patrick had developed an early personal interest in bitcoin, cryptocurrency and blockchain. In 2015 Patrick discovered smart contracts and R3’s emerging banking consortium. It became apparent that there was a need to develop a thought on blockchain for the insurance space. After some extensive research and discussions with numerous players in the space, Patrick made some recommendations to the senior management team to consider starting a blockchain insurance consortium in 2016. He felt that a not for profit would be perfectly suited to provide the network for the insurance industry. The Institute’s Board, which represents 40 – 50 CEOs that represent 60-70% of domestic insurance premium volume, reviewed the recommendations and supported them. Now RiskStream is not only doing this in the P&C industry but also expanding to Canada by working with LIMRAto start working on the life and annuities as well.

 

What is RiskStream Collaborative?

RiskStream’s perspective is that DLT (distributed ledger technology) is network driven, whilst the technology is here to answer pain points that the insurance industry faces, they feel that a non-partisan arbiter is needed to bring the industry together to design, test,

On the 12th of May 2019, Insureblocks went on a 2 week road trip across the United States of America. This trip took us from the International Finance Corporation in Washington D.C. to the North American Contingency Associaiton in Myrtle Beach, South Carolina. From there we headed to New York City to run a blockchain cross industry workshop at R3's offices before heading to Connecticut to run a blockchain presentation to the Connecticut Captive Insurance Association.

Throughout this trip we interviewed a number of individuals from insurance professionals to regulators and to professionals from the pharmaceutical industry:

* Nicholas Hanes, Senior Vice President, Underwriting and MGA Operations at Spotted Inc. and Vice President of NACA.

* Philip Mershon, Senior Account Manager - Entertainment at OneBeacon Insurance Group

* Dempsey Lulley, Risk Insurance Administrator at WeWork

* Philippe Heilberg, co-Founder & COO/CFO at Arbol Inc. 

* Flora Nanda, Senior Manager, Blockchain at Pfizer

* Michael Fulton, Associate Vice President, Technology Innovation at Nationwide

* Tomer Saar, Partner, managing director at DBI Construction Consultants and Construction Consultant

* Stephen DiCenso, Consulting Actuary at Milliman, Inc. and President of CCIA.

* Christopher Gallo, Insurance Accredited Financial Examiner, CFE at State of Connecticut Insurance Department

* Janeanne Lubin-Szafranski, Of Counsel at Neubert, Pepe & Monteith, P.C.

* Christopher Day, North America-Business Development and Sales at RapidQube Digital Solutions

* Dawn Ware, CEO, Ware Consulting LLC and Independent Director