Insureblocks

In this week’s podcast we will be discussing digital IDs onto the blockchain. We had the pleasure of having 2 guests in this episode. Daniel Faria, CEO of Nodalblock and Timothy Dwyer, VP and Assistant Treasurer at Nationwide Insurance. Daniel has had a career in cyber security and entrepreneurship. Timothy has spent a majority of his career in treasury and navigated into blockchain about 3 years ago by looking at the disruption it could bring to banking.

 

Blockchain in two minutes

To explain blockchain in a non-technical manner, think about a traditional accounting firm that has one hundred book keepers. What if each of one of those one hundred book keepers had at the same time had to maintain a ledger saying exactly the same thing. Out of those hundred if more than 51 would say that a certain record is wrong, then all of the other ones would have to fix the book to maintain the record exactly the same way.

 

About Nodalblock

Nodalblock is a blockchain cyber security company.

The fastest FBI has stated that the fastest growing crime in the US is identity theft with one identity being stolen every 3 seconds! That’s 35,000 every day and more than 15 million every year.

Nodalblock include digital IDs with multi factor authentication with a certification API that can be used to prove the authenticity of any digital file. A legal binding digital signature and and then an encrypted file transfer tool made available for a client’s IT systems via a regular API.

Nodalblock essentially brings security to the blockchain.

 

About Nationwide

Nationwide is a diversified insurance company offering life insurance, mutual funds, property and casualty.

Nationwide has had a keen interest in blockchain, ever since it launched a proof of concept for “Proof of Insurance” with the RiskBlock Alliance (featured in this episode – An Introduction to the RiskBlock Alliance) at the end of 2017.

Nationwide has been trying to determine if there was an opportunity for business disruption with blockchain technology on a stand-alone basis. They’re still trying to determine that and they still haven’t found a blockchain use case that will fundamentally change their business.

They’re still continuing to look for that and consider themselves to be in education mode regarding blockchian.

They have recognised the barriers to entry to blockchain, in the form of the network effect and in speed of transactions that can be pushed throught the network. Two points which they felt will be resolved in due course.

 

Digital ID

As we all know we all leave comprehensive digital footprints wherever we transact on the internet. Whether it is on social media sites like Facebook or Twitter, financial transactions with Paypal and Apple Pay amongst others. We all must disclose personal and financial data to uses these services. This leads to our personal data being stored in various databases which we have little control over. How can digital IDs on the blockchain help to address this, especially in a world where our IDs get hacked with Equifax last year and Facebook last week?

In this week’s episode we will look into how blockchain can reinvent the insurance value chain. Our guest is Risto Rossar, founder of Black Insurance. Risto has over 20 years experience in the insurance industry, having worked in insurance before launchingfive insurtech startups. Now he is focusing on Black, a blockchain-enabled, decentralised insurance marketplace.

 

Blockchain in two minutes

Risto focuses on blockchain’s value proposition, which he believes lies in replacing central authority bodies. Potential candidates include central and traditional banks, government branches, courts and (of course) insurance companies.

Blockchain does have a broader range of uses. However, Risto supports that other technologies can achieve these just as well and it is important to ensure the positive aspects of blockchain outweighthe challenges it entails.

 

Discovering blockchain

Risto had been exploring how technology can improve the insurance industry long beforeblockchain. In 2001 he created one of the first online insurance brokers, IIZI, which became the biggest insurance broker in the baltic states. Through this he realised insurance brokers are not particularly scalable, so Risto launched Insly to help them become digital. Inslyadapted IIZI’s successful technology, sellingit as a software solution to over 300 insurance companies and intermediaries in 40 different countries.

Launching his owninsurance brokering business and providing IT solutions to over 300 other brokers around the worldled Risto to blockchain and ultimately founding Black Insurance.

 

The insurance value chain

Risto’s multifaceted experience covers the consumer and brokering perspectives, as well as providing software solutions to brokers worldwide. He is happy to share what he has learned through his journey about the state of the insurance value chain.

 

1. The industry’s strengths and weaknesses

The main strength of the insurance industry is that it is dominated by big insurance companies, offering certainty and stability in the insurance market. This is reinforcedby a strong regulatory regime, aimed at protecting consumers.

These qualities, however,also contribute to theindustry’s weaknesses. The strict regulations create high barriers to entry, maintaining an oligopoly and working to the advantage of the biggest and bettercapitalised insurers. This not only leads to higher premiumsbutitis also a source of systemic risk, meaning that the problems of the biggerinsurance companies can quickly spread across the market.

Another problem facing the insurance industry is the lack of innovation, withbig insurance companies beingvery slow to innovate. This is exacerbated by the fact smaller startups, whether they are brokers, agents or MGAs, do not control the product. It is the large insurance companies that control the product, limiting the opportunities smaller companies have to innovate.

 

2. What can blockchain bring

Risto believes that, from a technical perspective, today’s insurance industry does not need blockchain. Blockchain’s real strengthis its abilityto get rid of the trusted third party. Everything else can be done with existing technologies. It is important, therefore, for companies to consider if blockchain is the best way to implement futureprojects or if existing technologies are better suited.

From a broader perspective, blockchain is still adding value to theinsurance industry. Blockchain has been a catalyst for innovation, with the whole insurance value chain exploring different blo...

With the US battling Hurricane Florence and typhoons battering China and the Philippines, the insurance industry is preparing for potential record claims. Handling those claims and, more importantly, helping those affected rebuild their lives is a challenge facing people across the insurance industry.

For today’s “Bonus Episode” we will be exploring how blockchain can provide insurance to hurricane afflicted areas. With us we have Renat Khasanshyn, co-founder of Etherisc. Renat is responsible for products at Etherisc, helping people join the Etherisc ecosystem to build their own insurance offering.

 

Blockchain in two minutes

A blockchain is a distributed ledger. By combining security and immutability through the use of cryptographic algorithms, the whole network can be absolutely certain they are accessing the same information. This enhanced trust and security creates numerous potential applications:

* Implementing checks and balances regarding funds or tokens in an account.

* Issuing and tracking an insurance policy.

* Using a smart contract to pay out claims automatically.

 

Etherisc

Etherisc, which also featured in a previous episode, (creating a decentralised insurance model with blockchain & smart contracts – Etherisc) is a decentralised insurance protocol promoting the collective creation of insurance products.

A protocol is a collection of rules. While these rules do serve as a guideline, what distinguishes a protocol from an industry paper is that the protocol creates a system of incentives and deterrents. Blockchain’s functionality enables it to promote collaboration by rewarding complying parties. For example, a member will be rewarded if it follows the protocol when valuing a claim.

Renat tells us Etherisc’s protocol consists of a theoretical and a practical aspect. On the theoretical level, the protocol outlines the responsibilities of each party in the Etherisc ecosystem, such as designating which party should be recording premiums.

On a more practical level, Etherisc provides common tools and infrastructure. This includes product templates or even an insurance license and is part of what makes the Etherisc ecosystem special. The protocol creates an added value that would not be possible if each member worked separately, even if they used the same technology and underlying code.

 

Etherisc’s vision

Etherisc is not simply a decentralised insurance company. It is an ecosystem aiming to democratise the insurance industry and people can join the Etherisc ecosystem to build their own insurance offering. How members structure their company is completely up to them. It can be a peer-to-peer pool, a mutual fund or a for-profit company.

What matters to Etherisc is that people on the ecosystem are fairly compensated. Its protocol enables members to be compensated in accordance with the value they create regardless of their age, race, gender or personal connections. Imagine, for example, a 20 year old Etherisc member from China. They could be a developer, data scientist or software engineer. Etherisc’s protocol could allow them to earn 3% of an EU or US insurance company’s revenue, creating a both fair and valuable opportunity.

 

For this week’s episode will be shifting our focus from blockchain itself to one of blockchain’s most popular applications, cryptocurrencies. Specifically, we will be discussing the challenges and opportunities of brokering crypto assets.

To help us we have a panel of experts including Rachel Turk, Head of Directors and Officers insurance at Beazley, Rhys James, Head of Management Liability and Financial Institutions at Paragon Brokers and Ed Ventham, Client Executive at Paragon Brokers.

 

Blockchain in two minutes

A blockchain is a distributed ledger that is maintained by a network of users. It is powered by its users, who keep it secure through cryptographic algorithms. This is a distinguishing feature of blockchain that ensures the ledger is safe and trustworthy.

 

Cryptocurrencies

Cryptocurrencies are the tokens of value that exist on specific blockchains. The Bitcoin blockchain, for example, uses Bitcoin. The US Securities and Exchange Commission designated cryptocurrencies as a currency, saying they work as a “replacement for sovereign currencies”. This distinguishes them from a safe security and has great implications on how insurers perceive cryptocurrencies.

 

1. Mined vs premined

A mined cryptocurrency, such as Bitcoin or Ether, is what people generally understand cryptocurrencies to be. Multiple users on the network solve the complex algorithms that keep it secure and are rewarded with the currency.

A premined currency involves creating a number of coins before the currency is launched to the public. The currency is then distributed over time onto the blockchain for its specific use case. Premined cryptocurrencies have a negative connotation in the crypto community as some argue gathering all the coins upfront allows companies to easily manipulate the market.

 

2. ICOs: utility and security tokens

Initial Coin Offerings (ICOs) are used to raise capital and involve the distribution of utility or security tokens. Utility tokens represent future access to a company’s services and are not designed as investments. This created difficulties for companies and insurers alike. When insurers were discussing ICOs and SAFT agreements, what they were really trying to cover was the legal risk inherent in the agreement.

Rhys informs us that, in the last few months, there has been a shift towards security token offerings. A security token offering is essentially an equity or dividend offering, with security tokens having an inherent security designation by the SEC. From a risk point view that means clients are preparing private placement memorandums and adhering to SEC rules around security offerings. This changes the risk of the ICO race and moves the market forward, making a great difference to insurers who can now know they are dealing with well-established securities laws.

 

3. The crypto industry

When examining the crypto industry it is important to distinguish between its different sectors. These include pure blockchain companies,

 

 

 

This week we bring you a very special episode, straight from the heart of London’s insurance industry. Our guest has provided leadership, inspiration, innovation and the embracing of all communities irrespective of gender, race or religious affiliation. We are proud to have with us Inga Beale, CEO of Lloyd’s of London. We will be discussing blockchain and the future of Lloyd’s. As Insureblocks is based on community, Inga will also be answering the questions you submitted over the past weeks.

 

Blockchain in two minutes

A blockchain is a shared, immutable record of transactions. Blockchain’s traceability and cryptographic verification make it an exciting prospect for the insurance industry.

Transactions can become particularly complex and involve numerous parties. A claim, for example, usually involves the claimant, the policyholder and the customer. However, it can also involve a third-party loss adjuster, a lawyer, an underwriter, a company claims adjuster, brokers and so on. The beauty of blockchain is that it creates a single, shared, transparent record that every party in the transaction can rely on.

 

Lloyd’s of London

Lloyd’s is an insurance market comprised of over 80 insurance syndicates. Lloyd’s is unique as these syndicates are competitors but also collaborate in sharing the bigger risks. In its 330 year history Lloyd’s has always been there to ensure risk never came in the way of human ingenuity and support human progress through the good and the bad, whether that was launching a satellite into space or the Titanic’s fateful voyage.

Lloyd’s in the changing landscape

The insurance industry has found itself at a point of unprecedented change. On the technology front blockchain, IoT, AI and robotics are ready to drastically update the industry. Incumbents also face a huge number of new entrants including insuretechs and their innovative, customer-centric propositions, Amazon and possibly even Chinese firms like Zhong An and Ping An. As Inga mentioned at the Dubai World Insurance Congress, the insurance sector risks “sleepwalking” in this new world if it remains complacent.

Inga has therefore taken active steps to ensure Lloyd’s remains a leader through this changing environment. While Lloyd’s has been known to be very traditional in some ways, such as being very paper-based, Inga informs us Lloyd’s has turned a corner and is on its way to being a leader in the new world. Unlike startups, whether insuretechs or fintechs, which usually focus on a single solution, Lloyd’s is focusing on the whole industry. It is working together with new entrants to make sure it is getting the best of these new ideas and piece them together to complete the bigger picture.

 

Driving change within Lloyd’s

Inga Beale and Shirine Khoury-Haq, Lloyd’s COO, have shown a keen interest in blockchain since 2015. This resulted to the London Market Target Operating Model (TOM) initiative launching in 2016, which now runs a major consultation to see how blockchain can improve the industry. Here is a copy of their whitepaper.

However, bringing change in an organisation as large and unique as Lloyd’s can be challenging.

Welcome to the second episode of our News Flash series, where we share the latest developments in the blockchain space. For today’s episode we are excited to present returning speaker Christopher McDaniel, president of the RiskBlock Alliance.

Chris will guide us through the release of Canopy 2.0, the new version of the RiskBlock Alliance’s blockchain framework, which will run on R3’s Corda Blockchain.

 

RiskBlock Alliance

The RiskBlock Alliance, which featured in one of our previous episodes (An Introduction to The RiskBlock Alliance), is an industry-led consortium comprised of insurance carriers, brokers and reinsurers focused on delivering blockchain solutions to the insurance industry. What sets it apart from other insurance consortiums is the fact it’s a not-for-profit organisation sponsored by The Institutes, an educational organisation focusing on the property and casualty space that has been around for over a century.

Since its founding last September, the RiskBlock Alliance has expanded significantly. It developed a relationship with LIMRA in the life annuity and retirement space and expects to expand in areas including group benefits and workers’ compensation.

 

The RiskBlock Alliance is built around three aspects.

* The consortium itself and its members, who are integral in ensuring the RiskBlock Alliance is for the industry and by the industry.

* Its blockchain framework, Canopy, a standardized set of blockchains that are reusable for many applications.

* Blockchain applications. The RiskBlock Alliance builds fifteen to twenty application on an annual basis on its Canopy framework.

 

Canopy

Before Canopy each company had to create its own blockchain for its applications. If a company decided to build a blockchain application utilising policy information, they created a policy blockchain. Then, if a different company built another application requiring policy information, they had to build a similar blockchain from scratch.

The RiskBlock Alliance’s solution to this is Canopy, a framework that makes it easier for companies to experiment with blockchain and create their own solutions. It provides a set of reusable blockchains, such as a policy or a claims blockchain, along with numerous applications that work on these standardized blockchains.

 

Canopy 2.0

Canopy 2.0 will be released in early September, along with a blockchain application for proof of insurance and one for first notice of loss in claims. It aims to become the framework that connects all blockchain applications together.

 

1. Universal framework

Canopy 2.0 will be the first universal version of Canopy. While the RiskBlock Alliance will continue building its own applications, Canopy 2.0 will be an open framework others can build upon. It will have the tools and components to allow others to cooperate with the RiskBlock Alliance and improve the framework by creating applications and expanding the framework itself. In that way Canopy 2.0 can grow beyond the areas it is currently focused on, making it the first true end-to-end blockchain insurance platform.

 

2. Back office connectivity

At the moment a lot of blockchain solutions ignore the problem of connecting back office systems with the blockchain, leading to a gap between blockchain applications and back office data. Canopy 2.

Welcome to another episode of our News Flash series, where share the latest developments in the blockchain space, straight off the press. For today’s episode we are excited to present Ken Marke, CMO at B3i, the blockchain insurance industry initiative.

Ken is joining us to reveal some exciting news about B3i’s new product and plans for the future.

 

B3i

B3i, which we have introduced in a previous episode, began life in October 2016 when five insurers and reinsurers came together to see how blockchain can benefit the insurance industry. This led to a consortium which ten other members joined to test the viability of blockchain in solving problems for the insurance industry. Its first project was a prototype for a catastrophe excess of loss programme, which has been very successful. The next step was to establish B3i as a legal entity, domiciled in Zurich.

Now, B3i is focused on expanding its product line and enabling partners to cooperate with them to offer more products and services on B3i’s platform, thereby creating a network ecosystem. Today B3i will reveal how it plans to achieve this goal and Ken is here to guide us through B3i’s announcements.

 

1. Commercial insurance development programme

B3i is launching its commercial insurance development programme, for which it recruited Antonio di Marzo from Generali. You listen to Antonio’s interview below to find out more about B3i’s development programme.

https://www.youtube.com/watch?v=r1tTRoY5BYk

B3i’s development strategy also involves expanding its global network. It will launch an office in New York in a few weeks and is planning to open several new offices in key regions around the globe. Additionally, B3i has been forming alliances with industry groups around the world, including the Association of British Insurers in the UK and the Chamber of Digital Commerce in the US.

The purpose of B3i’s new alliances, and of its development programme in general, is to expand its network and its ability to educate the insurance industry. Ken points out it is very important for the insurance industry to better understand blockchain’s potential. While experimenting with blockchain is welcome, Ken believes the time has come to move beyond experimentation and start identifying real problems blockchain can solve in the insurance industry. As Ken says, “let’s get blockchain out of the lab and into the business”.

 

2. Cat XoL product

Staying true to Ken’s word, B3i unveiled a demo of their Cat XoL prototype in September 2017, inviting companies to join its testing platform. We are excited to announce the Cat XoL product will become available on the market at the end of this year, taking live contracts on the platform through an early movers programme.

B3i chose Cat XoL as its first product as it is important to start simple when developing a prototype. A Property Cat XoL contract was the perfect choice as there is usually a smaller network in a reinsurance contract including a seed, a broker and a few reinsurers. Additionally, there are less transactions in a reinsurance contract, ensuring the new concept wouldn’t face too much pressure in the early stages of development. In that way, B3i could work on a simple project, making sure the prototype, its functionalities and peripheral needs are all in order before moving on to more complex products.

 

But isn’t trust already guaranteed in such a small...

In today’s episode we focus on insurance regulatory reporting with the American Association of Insurance Services (AAIS). With us we have Joan Zerkovich, Senior Vice President of Operations at AAIS. Prior to the AAIS, Joan worked in information technology, with over twenty years as a CIO specialising in building large infrastructure systems.

Joan will talk to us about openIDL (open Insurance Data Link), the blockchain-based solution aiming to improve data sharing between insurance carriers, the AAIS and US state regulators.

 

Blockchain in two minutes

Blockchain is a technology that provides increased trust and security in data sharing systems. It enables users to upload records, data or transactions to a system, which are stored in a chronological order and cannot be modified or deleted. The records are encrypted and stored in blocks, with copies of those blocks then stored in the same away across the network. The immutability of the records and the secure storage across numerous computers on the network provides a level of trust and security never before seen in data systems.

Smart contracts are blockchain’s other distinguishing feature. A smart contract is essentially software that checks for specified transactions in the network and automatically executes queries without exposing any more underlying data than necessary. Combined with blockchain’s immutability, this ensures the trust of all parties on the system.

 

American Association of Insurance Services (AAIS)

The AAIS is the only non-profit, member-owned advisory organisation in the US. As the US insurance industry is regulated on a state (instead of federal) level, the AAIS was formed to provide a common platform across all the state-regulated markets. Joan is here to guide us through the US regulatory framework and how the AAIS helps insurance carriers navigate it.

To begin with, insurance carriers need to request state insurance departments permission to create and rate a new product. After a long approval process, the insurer needs to report to the department once they start writing business. This can be a very time-consuming and expensive process and it can delay a product getting to market by numerous years.

The AAIS employs a countrywide programme to make this simpler across all fifty states. This includes creating common forms and contracts, whose language is set primarily on a national level but is adapted to conform to state-level regulations. Once the programme is approved by the regulator, any member of the AAIS can go through it to write business much quicker, significantly reducing the time and cost involved.

Another feature of the US insurance regulation is that antitrust laws do not allow insurance companies to share pricing and rating data between them. However, the AAIS, as an advisory organisation, can collect policy and claims data from insurance carriers across all states. It then uses that data to to create new products, update loss cost and rating factors and share them back with insurance carriers.

Finally, insurance carriers have to report to state regulators. This is done by providing the data to the AAIS, which aggregates and anonymises it before passing it on to regulators. Overall, the AAIS makes it easier for state-based regulators to serve their communities while also ensuring consistency across all states and improving operational efficiency.

 

Data collection before openIDL

While data collection, reporting and filing of new products is now digital, data is nevertheless coming from multiple different systems across thousands of insurance carriers. AAIS has to normalise the data,

Today with us we have Susan Holliday, Principal Insurance Specialist at the International Finance Corporation (IFC), all the way from Washington DC. Susan has over thirty years of experience in the insurance industry and specializes in insurance and insuretechs. We will be discussing how to unlock the future of blockchain and the opportunities for insurers in emerging markets.

 

Blockchain in two minutes

While there are different blockchains with slightly different features, blockchain is centered around two key features:

* It is a distributed ledger. This means it has numerous nodes and, if one part of the blockchain experiences an error, the rest of the blockchain remains operational.

* The transactions are processed in blocks. Each block is linked by a hash (a cryptographic function) and is immutable. This means it is completely transparent and users can trace every transaction.

 

The International Finance Corporation

The IFC is the World Bank’s private sector arm. It is government-funded, with nearly all governments of the world being shareholders of the IFC. Its goal is to invest in emerging markets to alleviate poverty and increase shared prosperity. It achieves this by considering both the financial returns and the developmental potential of a prospective investment. The IFC helps companies grow and brings in private sector investment. Following a project’s completion, it exits its current investment and uses the profits to continue its work in other areas.

Insurance plays a fundamental role in achieving the IFC’s goal by helping companies and individuals become more resilient. People can then establish businesses more easily, take on risks and better cope with the financial difficulties of a natural catastrophe or a death in the family.

The IFC works within all classes of insurance. It has invested in commercial line companies, reinsurers and personal line companies including non-life, life and health. Insuretechs are also becoming an increasingly important part of the IFC’s portfolio.

 

Insurance penetration in emerging markets

One of the challenges of emerging markets are the very low insurance penetration rates. While there are protection gaps everywhere, insurance penetration, which is measured by premiums versus GDP, is typically lower in emerging markets.

There are three main reasons emerging markets have low insurance penetration rates.

 

1. Natural catastrophes

Some emerging markets are exposed to various natural catastrophes for which they are largely uninsured. This is an increasingly big problem and the IFC is actively looking to provide solutions to climate risks. However, this is not the root cause as countries with a higher insurance penetration can also have a high catastrophe exposure.

 

2. The insurance trust deficit

In many emerging markets people are either unaware or distrustful of the insurance industry. Some of this distrust stems from historical examples of companies writing business with no intention to pay out valid claims or intermediaries who defrauded clients. Part of the blame, however, rests with the current state of the insurance industry. Products developed over fifty years ago are not well-suited to the needs and day-to-day problems of people in emerging markets.

The solution to this is customer-centricity. Companies need to pay more attention to the needs of clients to develop new and better-suited solutions.

 

3.

This week we focus on a recently published report claiming that the UK is poised to become a global leader in blockchain. To help us discuss this we are joined by Sean Kiernan– one of the reports key authors and CEO at DAG Global.

Sean is a banker, with previous experience in both Switzerland and London, as CEO of Falcon Private Bank’s London office, who at the time were the first regulated crypto-bank. He has recently been involved in setting up DAG Global, a London-based company aiming to become the UK’s first regulated crypto-bank where he is its CEO.

Blockchain in two minutes

The easiest way of describing blockchain is to imagine a spreadsheet, which everyone across the world can see, in both its current format but also every previous edition. This analogy reflects the decentralization of the ledger and also the immutability of the blockchain technology and can be extended further as formulas can be added to spreadsheets. The addition of formulas reflects automation offered by smart contracts, allowing ecosystems to be built and enabling the restructuring of processes for the benefit of all parties.

 

Is the UK placed to become a leader in blockchain?

To build a successful blockchain ecosystem, both IT and Financial sectors are required. Unlike the US, where San Francisco and New York are independently recognised as the technology and finance hubs respectively, London is rare in that it has a huge IT sector alongside a financial services sector which are both globally recognised. Many of the big American IT houses have acknowledged this, with Google, Apple and Facebook increasing their UK staffing despite Brexit lying just around the corner.  In addition to the right industry components, the UK’s regulatory framework is also beneficial to widespread blockchain development and adoption, but more on this will be mentioned later.

Whilst places like the Zug Valley in Switzerland are also competing for the title of ‘blockchain capital’, with an intent in the Swiss Banking sector redefining itself through marketing and cryptocurrency. However, the Swiss finance sector cannot compete with the depth of financial services offered in London, with a multitude of hedge funds, insurance, private equity and asset management firms alongside a healthy range of private banking firms also, leading to wider demands on the blockchain ecosystem and more potential for progress. The presence of blockchain consortium R3 in London represent the developmental opportunities in London, not only in finance but also within both healthcare and real-state industries also.

 

How has the UK Government engaged with blockchain?

The involvement of the All Party Parliamentary Group on Blockchain (APPG Blockchain) and Deep Knowledge Analytics in authoring this report has outlined the discussions between governmental groups and different sectors of the UK economy as to how blockchain can be used to optimal effect. Additionally, the FCA has provided public statements of support for the eme...