Every day there is some news about another sector of the mainstream financial world adopting blockchain. In the last few days news has come out that 14 of Europe’s largest insurance brokers have joined forces with Deloitte to operate a blockchain system that will simplify the transfer procedure for clients who want to move to another broker during the first year of taking out a policy. This move will enable insurers to comply with the Hamon Law, which states that insurance companies must make transfers easy for their customers.
Why have they chosen the blockchain? Because it will provide the most secure storage system for customer data. It is more secure than any existing database storage system and it will also allow these insurers to comply with a new EU directive on General Data Protection Regulations (GDPR), which is coming into force in 2018. And this won’t only affect Europe. If you plan to sell anything to an EU citizen, then you must comply with the upcoming General Data Protection Regulation (GDPR) standards (even if you don’t have operations in the EU).
The blockchain can overcome the challenges company’s face in complying with a range of regulations. It can provide a means of cost-effectively producing and sharing information with regulators whilst also reducing the burden of “report exhaustion” many organisations are facing. Furthermore, two of the key properties the blockchain can help with include provenance of assets and a chain of custody for operations on assets.
Companies that don’t adequately protect consumer data face large fines, so now is the time to turn to the blockchain as this group of insurance brokers have. The blockchain platform uses ‘Proof of Process’ technology that secures user data in a shared data storage system. It will limit data release to the absolute minimum for processing transactions.
AIG, another massive insurer has already started issuing policies on the blockchain. It is offer multinational smart contract-based policies in partnership with Standard Chartered Bank and IBM. According to AIG, the insurance sector is seen to vastly benefit from the blockchain technology. It will help cut down the processes that most insurance providers usually face with paperwork and filing of all the requirements.
As Adam Perlow, Founder and CEO of Zen Protocol told Jon Buck, writing for CoinTelegraph: “If the insurer sets some money in a smart contract, and the contract pays out based on the occurrence of an event as determined by an objective actuary/oracle, then there is no need for novel incentive schemes, the insurer simply cannot avoid the payout. In the long run, as one insurance company uses smart contracts to gain the public trust, others will be forced to follow suit.”