Emerging Technology

The Surprisingly Simple Ways Blockchain Makes Insurance Easier

These use cases demonstrate the big efficiency and cost-saving potential of blockchain technology.
By: | July 30, 2018 • 5 min read

Blockchain technology — despite the number of times it appears in headlines or on conference agendas — is still not well-understood by many in the industry. And its technical definition as a “decentralized distributed ledger” doesn’t provide much clarification for the less tech-savvy among us.


The CliffsNotes version: blockchain provides a central place to store shared data (like policy information) that is accessible to all parties and that allows that data to communicate with each other. It enables the automation of key steps of the claims process and provides transparency while also protecting shared data with encryption technology. Every transaction or change to information stored in the blockchain must be verified by every party. Each of these changes is added to the chain of information in discrete “blocks.”

Despite its buzzy reputation, blockchain does have concrete, real-life use cases that are relatively straightforward and accessible to insurers in various sectors. The Institutes has been working to test proofs of concept through its RiskBlock Alliance, a group of 29 firms (and counting) in the property/casualty space willing to share their data and work toward development of common-use blockchain solutions.

Pete Miller, CEO of The Institutes, said the development of blockchain use cases will follow three phases: initial iterations focus on automating manual processes to increase efficiency and cut costs; second phase solutions will be about building new products, or policies built and triggered entirely within a blockchain, and the final phase of applications will interact with IoT devices and utilize artificial intelligence for proactive risk management purposes.

Here are some first- and second-phase examples that RiskBlock has in the works:

1. Proof of Insurance

Providing proof of insurance is a common process integral to so many transactions in every industry — and is also a common source of snafus and delays. Loading insurance policies into a blockchain can eliminate some of the headache.

“Take personal auto as an example. Two people get into an accident. They take out their paper insurance cards to exchange information. But paper documents are not the most reliable or trustworthy. Their insurance may be expired. Maybe they lost their card or it got damaged,” said Christopher McDaniel, executive director of RiskBlock.

Peter Miller, President & CEO, The Institutes

“If the drivers’ auto policies are loaded onto a blockchain that their carrier belongs to, they can access their policy information through a mobile app plugin. They can tap their phones together and it goes out to blockchain, gets policy info on each one of them and tells each what the other person’s coverages are. It’s instant verification.”

The same application can also be applied to commercial trucking.

“When a truck driver goes to pick up a load at a depot, there’s a 30-minute process for their insurance to be verified,” McDaniel said. “We took proof of insurance that’s used for personal auto and adapted it to trucking, so it takes that 30 minutes and makes it instant. A large trucking company might go through this process 200,000 times per day, so saving 30 mins each time adds up to 100,000 hours saved. Cost savings are astronomical.”

The same scenario also works for companies dependent on contractors who require certificates of insurance. Instant access to accurate policy information allows these companies better to manage their risk and save time on the front end verifying every worker’s coverage.

2. First Notice of Loss

As the first step of a claim, timely loss notification is critical. It kicks off the adjustment process and behind-the-scenes communication among insurers to work through who owes who, and how much.

“Go back to the auto accident. You contact your insurance company. The other driver contacts theirs. Then the insurers have to talk to each other. Having all of the data on the blockchain simplifies and automates a good portion of this conversation, and it automatically starts the claim process,” McDaniel said. “It cuts out big portion of the claims period.”

Despite its buzzy reputation, blockchain does have concrete, real-life use cases that are relatively straightforward and accessible to insurers in various sectors.

This application could also apply to large commercial property losses where multiple insurers are involved. Blockchain can compare coverages in real time and eliminate a lot of back and forth to determine who is on the hook for different portions of the loss.

3. Subrogation

Taking that one step further, blockchain technology can also automate payments. So once the appropriate amounts and liable parties are determined, one electronic check is issued.

Christopher McDaniel, executive director, RiskBlock Alliance

Personal auto again provides a relatable demonstration.

“Geico may settle 10,000 claims a month with Nationwide, who settles thousands with someone else. But when it comes time to pay, it’s on a per-claim basis. That’s thousands of checks being written back and forth every month,” McDaniel said.

“The app, plugged into the blockchain, consolidates data and issues one electronic check at the end of the month. This cuts out a tremendous amount of overhead.”

4. Parametric Insurance

While the previous three use cases are set to roll out by the end of the year, a parametric insurance use case is still a work in progress.

“Other examples are more efficiency-based. They streamline and automate processes that take place around existing policies Parametric policies are a whole new product category,” McDaniel said.


Because parametric policies are built around event characteristics rather than the loss itself, accurate documentation of inches of rain, seismic activity, or wind speed are critical to determine whether coverage is triggered.

“Right now there is so one source that everyone trusts for this information,” McDaniel said. “Parametric insurance policies on the blockchain would pull info from multiple sources, aggregate it and feed it into claim process to minimize adjustment and time spent arguing over whether conditions met policy triggers.”

Implementation Roadblocks

So far, most blockchain products are used only internally within one company, or between a handful of companies party to a shared contract. But in order for these uses cases to work on a broad scale, many companies have to participate and be willing to share their data. The above examples are meaningless if every insurer involved is not part of the blockchain.

“For blockchain to work, many insurers, reinsurers and brokers have to share their data to their mutual benefit.”  — Pete Miller, CEO, The Institutes

“For blockchain to work, many insurers, reinsurers and brokers have to share their data to their mutual benefit,” said Pete Miller, CEO, The Institutes. “That’s a big impediment, getting enough people to be comfortable with that. These proofs of concept are just as much proofs of collaboration. The entire industry needs to work together to make these happen on a large scale.”

Luckily, more and more companies are realizing they’re better off in the blockchain than out of it.

“So far we have 29 insurance firms in property/casualty participating, with many more interested,” Miller said. “We’re expanding into life and annuity insurance soon, and will be expanding overseas.” &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.


But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.


Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &


Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]