Blockchain tipped as a game changer for the insurance industry.
Fitch Ratings, one of the “big three” credit rating agencies has said that it believes blockchain is a game-changing technology. In a report released last week, it stated that the insurance industry is a fertile ground for the capabilities of blockchain.
A useful tool
Fitch added that they see blockchain technology as a useful tool for the streamlining of companies’ transactions whilst simultaneously reducing occurrences of fraud. These benefits are likely to be felt during the next three to five years due to the fact that the industry needs time to adjust to such a disruptive technology. Once blockchain has matured and been adopted on a more widespread scale, it is expected to not just impact the insurance world, but the credit rating firms as well.
“Efficiencies and cost reductions could be achieved by reducing the need for reconciliation and audits, automating certain processes and improving access to data. Estimates of the potential savings for the global (re)insurance industry from Pricewaterhouse Coopers and B3i, an insurance industry trade group focusing on blockchain, range from 15 percent to 30 percent of annual current expenses.”
The company also noted that uncertainties around the technology remain pronounced and there are question marks around how widely it will be adopted and whether the benefits of using it will outweigh the investment needed to get it up and running.
“There are numerous legal, regulatory and security issues that need to be addressed to facilitate wide-scale adoption,” Fitch wrote, adding that: “…the ultimate viability of the technology for the insurance industry will depend on a select group of industry leaders adopting blockchain to gain competitive advantages.”
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