Insurance blockchain consortium awaiting nod to grow nationally
IBM is awaiting regulatory clearance to take blockchain deployment to a consortium of general insurance companies
nationally, after a pilot designed to facilitate easy transfer of medical records between insurance companies.
“Currently, the blockchain use-case we have in place is for insurance companies
to share medical records effortlessly, to reduce duplication of records across the board. The consortium is awaiting regulatory clearance to bring it into action,” said Jitan S Chandanani, partner–blockchain leader, IBM ISA.
Blockchain is a distributed and decentralised method of storing information, based on mutual agreement of members.
IBM is the technology partner with Cateina Technologies, the technology provider to the consortium of 15 insurance companies trying to bring blockchain into use across the insurance system.
“It is important to ensure that a proper regulatory framework is in place before a consortium brings about industry-wide changes, as it would be impacting consumers across the board. It is also important to ensure the consumer does not lose the power to choose between insurance providers based on their pricing,” said Raj Chowdhury, managing director at HashCash, a blockchain consultancy.
Business Standard had reported last year global advisory firm EY had partnered with the consortium to engage with technology partners. The insurance blockchain consortium was formed soon after Indian banks, led by the State Bank of India (SBI) announced a similar platform to utilise blockchain technology.
PwC’s Global FinTech Report 2017 expects 77 per cent of financial technology institutions to adopt blockchain as a process by 2020, with payments, fund transfer and digital identity management being the top areas of usage.
WHAT IS A BLOCKCHAIN
* Blockchain is a distributed and decentralised method of storing information based on mutual deal of members
* The first blockchain was conceptualised in 2008 by an anonymous person or group known as Satoshi Nakamoto
* It was implemented in 2009 as a core component of bitcoin where it serves as the public ledger for all transactions
Blockchain will be introduced in the insurance domain for the transfer of medical records initially, before the technology is taken to other areas of the insurance ecosystem. Instead of customers going through the tedious process of performing a new medical check-up for every insurance cover, the technology will allow the insurance companies to share their existing verified medical records with the new insurance provider.
“We worked with Cateina to develop an incentive mechanism so that there is a fair exchange of records given that some companies may have lesser number of customers than others,” said Chandanani. Another major aspect of the use-case that IBM has worked upon is the security of customer records. No transaction concerning customer records can be carried out without their knowledge and consent. Record owners will be intimated through messages every time their records are being accessed and records won’t be shared without their consent.
ICICI Prudential, HDFC Life, SBI Life, IDBI Federal Life and India First Life are some of the major insurance providers who have come on board the consortium.
The consortium is also ready for future integration with banking systems with an additional application programming interface (API) which will allow banks to connect to the insurance blockchain via any blockchain technology such as MultiChain, Primechain etc., said Chandanani.
“We are connected to Bankchain (banking blockchain consortium) members so the engagement shouldn’t be difficult. Claims processing will gradually move to blockchain over time because the ecosystem is very fast but the remittance space will adopt blockchain much faster,” Chandanani said.