Ruschlikon versus blockchain
At the recent Ruschlikon General Assembly the question was asked ‘why is it easier to get C suite attention for blockchain but not Ruschlikon’? That is a good question. On past evidence the market has been slow to adopt any new technology, but blockchain seems to have captured imaginations. It was widely reported by companies at the General Assembly that there was more interest in blockchain at the C level than an established initiative like Ruschlikon, but why?
There is certainly a lot of hype around blockchain that the C suite seem to have tuned into, but whether this is based on an appreciation of the potential of blockchain, or whether it is a case of ‘well everyone is talking about it so it must be good’ I am not sure. Also, these things get a momentum that generates interest even if one doesn’t know why.
Blockchain is perceived to be a game changer, which it is, but is there an appreciation of why it is a game changer? There is an ongoing POC utilising blockchain within the Ruschlikon process coincidentally, where Technical Accounts are sent to a blockchain that allows agreement by the carriers and communication back to senders. ACORD are working on micro messages, which are sub-sets of EBOT messages that better support blockchain, because with blockchain technology you are adding pieces of data to the end of the chain and therefore don’t need to send the whole TA payload every time.
I think that one reason that Ruschlikon does not get the attention of blockchain is that in some cases it is hard to make a business case for straight through processing and without STP the real big benefits are not realised. The reason for this I think is that for complex lines of business, such as energy, or for multi section or multi territory risks, the processing of the TA and validating it against the carrier’s record is sometimes hard to automate and also the volumes tend to be low, so the business case for automation does not stand up.
One other hot topic in the insurance industry is machine learning and AI. One reason that automation of TA processing is difficult is that the rules do not lend themselves very well to traditional programming techniques. Machine learning and AI could change that.
People roll their eyes if you speak of AI replacing underwriters, but I think there is potential in utilising AI and machine learning in automation of back office functions.
I think that blockchain has a role and I think that the ‘smart contract’ capability has many exciting use cases, but we should be looking to cover numerous emerging or developing technologies to holistically impact the insurance life cycle.