Blockchain & Insurance: early thoughts

. 10 letters of headache, 10 letters of wonder. Over the last few years and months, this technological piece of art has been gaining traction among developers, journalists and citizens. And quite naturally, the blockchain hype has also knocked on the doors of : our corporate venture capital fund AXA Strategic Ventures invested in Blockstream, our trend sensing outposts AXA Labs reported a lot of activity in the field and I led an internal effort by the AXA Foresight squad to raise awareness on the and its potential.

What do insurers basically do for their consumers? They collect money from policyholders, manage it and run a process of claims to re-allocate the pooled money to the relevant policyholders. Now Blockchain allows to program trust in a distributed way, which threatens the central role of insurers in the current process. If we consider the barriers to entry in the insurance sector, the disruptive potential of Blockchain is even more striking: capital constraints could be overcome by crowdfunded Decentralized Autonomous Organizations; claims management could be automated through smart contracts; the power of the brand would disappear as trust can be programmed; actuarial skills could be replaced by open logs of claims and data science.

If we look at the topic through the lens of the value chain, the disrupting power of Blockchain is all the more tangible:

1. Product design: blockchain-based products will hold more promises to customers (e.g. instant payments) than traditional ones

2. Pricing: as blockchain allows transparency of information, a combination of Blockchain and Data Science could allow dynamic price adjustments

3. Distribution: Blockchain could become a new distribution channel, as blockchain players sell services that combine well with insurance (e.g. stadium ticketing through Colu could be complemented with an additional stadium insurance option linked to the ticket)

4. Underwriting: automated contracts combined with blockchain-based identification tools such as or uPort could enable advanced insurers to close a sale in no time

5. Claims management: with simplified products and smart contracts, the first blockchain insurers will potentially post expense ratios much lower than incumbents, all the more if back office is automated too (e.g. blockchain-based automated request for claim adjustment)

Obviously, insurers do not only offer plain coverage but also services that Blockchain will have a harder time disrupt. I nonetheless take very seriously initiatives like Dynamis (a blockchain-based unemployment insurer) for several reasons: those initiatives are led by skilled people that should be considered our benchmark in terms of blockchain mastering ; such disruptors are able to get round incumbents strongholds and willing to recreate the insurance industry from scratch, which makes any condescending attitude towards them highly dangerous; they invent new classes of products (in the case of Dynamis, through leveraging LinkedIn), which can be beneficial to the whole insurance industry.

“With a good deal of work and humility, insurance incumbents can also thrive on Blockchain”

With a good deal of work and humility, I believe insurance incumbents can also take advantage of the vast opportunities of Blockchain: we could help blockchain users better secure their private keys, act as oracles (i.e. trusted data providers) for disruptors, or improve user experience through more trusted and rapid claim handling. Assistance companies could provide field services for pure players like (Ethereum-based renting solution), thus providing incumbents with their fair share in the success of disruptors.

“Blockchain is a great promise. Let’s deliver it”

Blockchain is a promise for our consumers. A promise of undisputed trust, a promise of radical efficiency, a promise of smart insurance products. Keeping those promises cannot be anything else than a tremendous opportunity for insurers. Let’s get to work!