The advent of blockchain technology in the insurance industry could have an impact on the intermediary market but there will still be room for brokers, an expert has said.
Blockchain allows users to share a trusted record or ledger of events and is distributed across all participants in a network, which removes the need for a third party to act as an intermediary. The fledgling technology could have a big impact on how insurance develops over the coming years.
Raj Juta, insurance sector leader for Deloitte
Southeast Asia, told Insurance Business
that while blockchain technology can remove the need for an intermediary in some transactions, brokers will still be relevant.
“Blockchain allows participants to place trust in their transactions even in the absence of a central authority, thus enabling disintermediation,” Juta said.
“Mirroring the insurance industry, blockchain aims to bring insured and insurers to one single platform.
“However, there are conditions under which blockchain is not likely an appropriate solution, at least in the near future when transactions have potentially competing incentives, or when retroactive manipulation of data is a risk, or when multiple uses of the same asset are very likely and no central trusted authority is available or wanted.
“Thus, the market still has room for broker and intermediary.”
Whilst there is “incredible potential” for the industry to utilise blockchain in its day-to-day operations, Juta said that the true advent of the technology may take time to reach fruition, as the nature of blockchain requires industry collaboration both internally and externally.
For blockchain to have its full impact, Juta said that insurers need to begin to work together and utilise help from outside the industry to drive development over a number of years.
“To insurers, it is time to start working with technology experts and start-ups, regulators, and other market participants to identify the challenges around blockchain’s open and decentralised nature,” Juta continued.
“Among these challenges are technology limitations as well as market, legal or regulatory, and operational requirements regarding, for example, data protection and standardisation.”
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