Risk Insider: Greg Bangs

No Consensus on Blockchain Standards

By: | May 18, 2017 • 3 min read
Gregory W. Bangs is chief underwriting officer of global crime at XL Catlin. Over the last 30 years, he’s been underwriting insurance and developing new products in the U.S., U.K., Hong Kong and France. He can be reached at [email protected]

Technology has transformed the way many companies transact business. And, with the advent and increasing acceptance of “blockchain” technology, we should expect even more dramatic change.

As R&I’s Roger Crombie noted in his column “The Blockchain Revolution?” there’s been an awful lot of hoopla about blockchain in the insurance industry, yet few really understand it and how it’s going to work.

Originally developed as the technology underlying crypto-currency transactions, blockchain technology may eventually enable greater efficiency, transparency and security in a wide range of industries from financial services companies — including insurers — to many others. Before jumping on the blockchain bandwagon though, there are still some issues and risks to consider.

For one, there’s still a lack of consensus on blockchain standards and no regulatory structure addressing risk transfer and loss allocation. This may create potential exposures that need to be considered when buying insurance. Private and semi-private blockchains also present concerns around determining who has access to potentially relevant transactional information and ensuring that limitations on access are fully in place.

I’ve recently worked with my industry colleagues Scott Schmookler and Katherine Musbach, attorneys with the Chicago-based law firm, Gordon & Rees, to outline some top concerns particularly as they relate to such crimes as fraud. As we see it, while this technology intends to make fraud tougher, using it to transfer securities and negotiable instruments could potentially increase the risk. Every time a document is subjected to a copying process, a small amount of information is lost.

Originally developed as the technology underlying crypto-currency transactions, blockchain technology may eventually enable greater efficiency, transparency and security in a wide range of industries from financial services companies — including insurers — to many others. Before jumping on the blockchain bandwagon though, there are still some issues and risks to consider.

The issue is worsened with multi-generational copies, or copies of copies, many of which contain insufficient quality for examination and comparison. The key to preventing falsification of the blockchain is to make the additions costly and there are many ways to do that.

Also, blockchain transactions may be less likely to receive comprehensive reviews looking for fraud, alteration and forgery. For instance, participating institutions may not receive the original documents on which the transaction is based, and therefore may not have an opportunity to analyze their authenticity. And if the technology evolves such that original documents are no longer provided, that could increase the potential for information to be lost through hacking or through a technological failure.

With a growing number of competing blockchain-based platforms, there is also a potential for assets to be double-pledged or for parties to enter into conflicting transactions. For example, the seller of a promissory note could use one proprietary blockchain-based platform to sell a note. Absent a means to compare transactions effected on one platform against transactions effected on another platform, the same seller could attempt to sell the same note through a different proprietary blockchain-based platform, in essence defrauding the purchaser, who — absent strict verification procedures — could be induced to unknowingly purchase a note the seller did not own.

Blockchain’s efficiency advantages must be weighed against the risks. As more businesses move forward into the brave new world of blockchain technology, they must remain mindful that this is just another means of conducting business transactions, and the time-honored principle of caveat emptor still applies. All those entering into blockchain transactions should do their due diligence.

More from Risk & Insurance

More from Risk & Insurance

2017 Teddy Awards

The Era of Engagement

The very best workers’ compensation programs are the ones where workers aren’t just the subject of the program, they’re a part of it.
By: | November 1, 2017 • 5 min read

Employee engagement, employee advocacy, employee participation — these are common threads running through the programs we honor this year in the 2017 Theodore Roosevelt Workers’ Compensation and Disability Management Awards, sponsored by PMA Companies.

A panel of judges — including workers’ comp executives who actively engage their own employees — selected this year’s winners on the basis of performance, sustainability, innovation and teamwork. The winners hail from different industries and regions, but all make people part of the solution to unique challenges.


Valley Health System is all-too keenly aware of the risk of violence in health care settings, running the gamut from disruptive patients to grieving, overwrought family members to mentally unstable active shooters.

Valley Health employs a proactive and comprehensive plan to respond to violent scenarios, involving its Code Atlas Team — 50 members of the clinical staff and security departments who undergo specialized training. Valley Health drills regularly, including intense annual active shooter drills that involve participation from local law enforcement.

The drills are unnerving for many, but the program is making a difference — the health system cut its workplace violence injuries in half in the course of just one year.

“We’re looking at patient safety and employee safety like never before,” said Barbara Schultz, director of employee health and wellness.

At Rochester Regional Health’s five hospitals and six long-term care facilities, a key loss driver was slips and falls. The system’s mandatory safety shoe program saw only moderate take-up, but the reason wasn’t clear.

Rather than force managers to write up non-compliant employees, senior manager of workers’ compensation and employee safety Monica Manske got proactive, using a survey as well as one-on-one communication to suss out the obstacles. After making changes based on the feedback, shoe compliance shot up from 35 percent to 85 percent, contributing to a 42 percent reduction in lost-time claims and a 46 percent reduction in injuries.

For the shoe program, as well as every RRH safety initiative, Manske’s team takes the same approach: engaging employees to teach and encourage safe behaviors rather than punishing them for lapses.

For some of this year’s Teddy winners, success was born of the company’s willingness to make dramatic program changes.


Delta Air Lines made two ambitious program changes since 2013. First it adopted an employee advocacy model for its disability and leave of absence programs. After tasting success, the company transitioned all lines including workers’ compensation to an integrated absence management program bundled under a single TPA.

While skeptics assume “employee advocacy” means more claims and higher costs, Delta answers with a reality that’s quite the opposite. A year after the transition, Delta reduced open claims from 3,479 to 1,367, with its total incurred amount decreased by $50.1 million — head and shoulders above its projected goals.

For the Massachusetts Port Authority, change meant ending the era of having a self-administered program and partnering with a TPA. It also meant switching from a guaranteed cost program to a self-insured program for a significant segment of its workforce.

Massport’s results make a great argument for embracing change: The organization saved $21 million over the past six years. Freeing up resources allowed Massport to increase focus on safety as well as medical management and chopped its medical costs per claim in half — even while allowing employees to choose their own health care providers.

Risk & Insurance® congratulates the 2017 Teddy Award winners and holds them in high esteem for their tireless commitment to a safe workforce that’s fully engaged in its own care. &


More coverage of the 2017 Teddy Award Winners and Honorable Mentions:

Advocacy Takes Off: At Delta Air Lines, putting employees first is the right thing to do, for employees and employer alike.


Proactive Approach to Employee SafetyThe Valley Health System shifted its philosophy on workers’ compensation, putting employee and patient safety at the forefront.


Getting It Right: Better coordination of workers’ compensation risk management spelled success for the Massachusetts Port Authority.


Carrots: Not SticksAt Rochester Regional Health, the workers’ comp and safety team champion employee engagement and positive reinforcement.


Fit for Duty: Recognizing parallels between athletes and public safety officials, the city of Denver made tailored fitness training part of its safety plan.


Triage, Transparency and TeamworkWhen the City of Surprise, Ariz. got proactive about reining in its claims, it also took steps to get employees engaged in making things better for everyone.

A Lesson in Leadership: Shared responsibility, data analysis and a commitment to employees are the hallmarks of Benco Dental’s workers’ comp program.


Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]