Blockchain is not understood by a sufficient number of insurers and is therefore obstructing its progression, says PwC in a new report.
The firm says that, while blockchain is proving an excellent system for transparent, real-time customer experience for early adopters, the gains will be greatest if insurers focus their experimentation on increasingly complex use cases.
PwC said the first hurdle has been cleared following the first market launches of solutions via smart contracts.
“These solutions have demonstrated the reliability of decentralised protocols, particularly for ensuring the integrity of exchanged data, contributing a starter level of automation and offering a high quality user experience,” explained PwC.
The report states that the willingness of players to share data and facilitate reinsurance processes presents the next hurdle for blockchain.
Therefore, challenges persist regarding how to best approach technical and functional governance and, above all, how to determine the right use-cases.
“Interest in blockchain protocols is effectively higher when use cases encompass transactions involving exchanges with multiple third parties, which requires a real change of direction in such a data-centric industry,” explains the report.
A more complex ecosystem is emerging and with it comes additional risks, concludes PwC. But insurers have the opportunity to help customers face them.
Beyond being an enabler, blockchain technology may represent a new business sector for the insurance market with the potential for new products and services tailored to the needs of the blockchain community, such as insurance cover for cryptocurrency and ICOs.
