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OVER THE PAST FEW YEARS, much has been made of blockchain technology and its potential as a tool for streamlining a wide range of business transactions. Some companies see blockchain as a disruptive, revolutionary technology that will transform the way they do business, while others are more skeptical. Given the hype, will 2017 be the breakout year for blockchain in the insurance industry?
Most commonly known as the technology behind bitcoin, blockchain has more recently been touted as the latest tool to improve business operations. Uncertainty remains among many business leaders, however, around how it can be put to use. In a recent Deloitte survey of more than 300 U.S. executives, 28% of respondents reported that their companies have already invested $5 million or more in blockchain technology and 10% had invested at least $10 million. However, 39% indicated they had little or no knowledge at all about the technology.
"It is fair to say that industry is still confused to a degree about the potential for blockchain," said David Schatsky, managing director with Deloitte. "More than a quarter of the knowledgeable executives surveyed say their companies view blockchain as a critical, top-five priority. But about a third consider the technology overhyped."
The survey revealed that the technology, telecommunication and manufacturing sectors are out in front, with about one-third of these respondents indicating they are already using blockchain. By contrast, just 12% of surveyed financial services company executives report having deployed blockchain in their operations.
This trend is corroborated by a recent survey of financial services businesses by PricewaterhouseCoopers (PwC) in which more than half of the respondents knew blockchain is important, but were uncertain about how to go forward with it.
"Insurers, in particular, are less likely to be familiar with blockchain technologies and applications," PwC said. "This is in line with the more general perception that insurance often lags behind other sectors of financial services in modernizing its business processes and technology. This reflects the need to work with large clients, provide bespoke cover and manage specialist risks; these require data-heavy interactions between multiple participants including brokers, insurers and reinsurers."
WHAT IS BLOCKCHAIN?
Blockchain is a digital ledger that allows consumers and suppliers to securely connect with each other, without the need...