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12 Sep 16 10:37

Most of the 10 million people who play Pokémon Go each day don't understand how it works, but still they play it. Why? Because it's fun and easy to play – there is no lead-in time. It's also a new way of visiting a place- usually your own neighbourhood or city. What if we simplified insurance in the same way and made it just another app on your phone?

Blockchain technology is a decentralized, peer-to-peer network. It's a virtual database and acts as a modern time machine, permanently and immutably recording all transactions happening on it over time. The use of cryptography ensures that participants to the network and transactions happening on it remain private. It runs on a consensus mechanism that is decentralized - transactions are validated by participants and not by a central authority as is usually the case in finance. Moreover, blockchain enables smart contracts, which self-execute when pre-defined quantifiable, verifiable and external data or parameters are triggered (eg paramteric insurance triggers for ILS).

Currently, the insurance eco-system consists of multiple, unconnected ledgers. If an insurance policy is triggered, the broker notes the loss on his/her system and then communicates it to the insurance company responsible for the claim, which notes it on its system (or ledger). The insurance company then issues a bill to the reinsurer, which notes it on the reinsurance company's system, and finally various bank ledgers are triggered to effect the associated payments. All of these activities are interconnected, but until now, dealt with manually, separately and in sequence. The "nodes" in the system, which connect the ledgers, are teams of human beings who operate payment and reconciliation processes, making the process lengthy, costly and subject to human error.

With blockchain, the nodes are computers, and the interconnectedness is ensured by the distributed nature of the network. This elegant meta-technology allows participants to (simultaneously and in real-time) access all the information across the value chain. Potentially, the whole re/insurance industry could operate from the same ledger. Participants such as different insurance companies could also operate their own separate blockchain network so that a claim made directly on their ledger could trigger the payment through a smart contract and trigger another payment from the reinsurer to the insurer using the same ledger or an inter-operating ledger. We could even envisage a virtual currency within the re/insurance industry used for all payments.

So blockchain technology not only has the potential to help us simplify our contracting but also our ability to cooperate across industries and functions.

A recent study by PwC found that while 56% of insurers polled recognized the importance of blockchain, 57% admitted they did not yet know how to respond. While there is much talk about blockchain at the moment with a limited number of re/insurance-related use cases, I believe it's only a matter of time before it becomes part of our everyday life, like barcodes: what once felt so innovative becomes a useful device that we don't really notice anymore. So maybe blockchain isn't just a trend this summer... unlike Pokémon Go!

What kind of advantages do you see in blockchain? And are there use cases you'd like to share as comments below? I would be glad to continue this discussion and consider developing some with you!

Category: Other

Location: Zurich, Switzerland


Bhavik Shah - 13 Sep 2016, 12:45 p.m.

That was a good read and made a great point which is the need of the hour.Insurance industry for the businesses has come of age and need to create systems that are fast , on demand and simple.I came across - which might interest you

Theo - 13 Sep 2016, 2:26 p.m.

Thank you for sharing. In the context of insurance, the protection gap comes to mind – and how we need to reach more people offering not only great products but also great experiences. How about using blockchain to match your safely stored personal context/information to products you want/need and make the experience seamless: easily log on – 'click to logon with blockchain x' – and look at relevant customized information and opportunities (e.g. what is my insurance need, product x to address need x at price z). This having full control of what you share with providers and what opportunities to act on. Almost as simple as Pokémon Go :-)

Müge Cöteli - 13 Sep 2016, 4:45 p.m.

Very interesting, thank you for sharing - also an excellent example of a platform enabling cross-functional collaboration. I truly believe this is the Future of Work in the re/insurance industry.

Müge Cöteli - 13 Sep 2016, 4:55 p.m.

I agree Theo, those are interesting potential prospects, and very much areas of focus currently at Swiss Re amongst those that develop use cases around blockchain technology. It would be a pleasure to discuss your ideas further..!

Anish Jacob Vadakkedath - 16 Sep 2016, 7:07 a.m.

Thanks Müge; think you have explained blockchain in a very simple and beautiful manner, that anyone can understand the concept well.

The success of block chain depends on sharing of data - is "data without borders" possible in a competitive world?

Müge Cöteli - 18 Sep 2016, 8:52 p.m.

Thank you Anish, for your kind feedback.

In my view, "data without borders" is not only possible, but necessary. In a world, where borders seem to be back in fashion but de facto remain quite porous, individuals and companies should be able to design their virtual data closet in such a way as to allow for an agile adaptation to quickly evolving circumstances. However, while the era of digital globalization fosters cross-border data transfers, data owners should be given back full control over access to and use of their personal and sensitive data. A desirable future of the current technological developments partly lies in our ability to ensure the latter, and blockchain might be a key to the solution.

Mayank Goyal - 19 Sep 2016, 7:09 a.m.

This is nice but do companies want to move to move to newer startegies of using blockchains? Probably no that would take too much research an you would be starting from base. The main question arise, Are they ready for modern approach? And I think everything and everyone right now is following blockchain is that except insurance?

Alicia Montoya - 21 Sep 2016, 6:57 a.m.

I think blockchain is like having babies: You're never ready, you've just gotta jump right in!

And it's impressive to see the speed and extent with which the finance industry (and yes re/insurance too!) has done just that - pretty much everyone is piloting some use case or product.

Looks like Bermuda wants to position strongly around it as well

Alicia Montoya - 21 Sep 2016, 7:01 a.m.

As part of that "insurance protection gap" (for the uninitiated, that means uninsured), I must say a big part of why I don't buy insurance is the lack of transparency. Another issue I have is with the lack of product flexibility / modularity (current products simply don't speak to my needs - not that I'd ever be caught reading an insurance contract, seeped in legal speak and exclusions).

So blockchain would go a long way towards addressing several of the issues I have with insurance today. In other words, yes, please, I like your idea, Theo. Bring it on! :)

Fissuh Hailu Kelelom - 25 Sep 2016, 8:45 p.m.

This is very exciting! It could dramatically simplify they we do business. Great stuff!

Fissuh Hailu Kelelom - 25 Sep 2016, 8:46 p.m.

But but..I think it will increase unemployment:)

Christian Engeln - 7 Oct 2016, 12:43 p.m.

Extremely good summary, every dummy now can understand what "blockchain" is about.
Even me ;-) !

Christof Gellan - 19 Oct 2016, 4:17 p.m.

Thanks Müge, very concise and helpful in understanding the basics of the concept.

As a first use case databases shared between insurance companies come to my mind, e.g. for antifraud cases - sensitive information can be exchanged without creating antitrust issues - or a coverage database for MTPL reporting the carrier who actually covers the risk, as used in Italy, for the Direct settlement regime as well as by the police forces.

In a second thought the decentralised approach combined with the peer to peer approach and the immutability (which has been "bended" lately) have a potential to enter into and "rotavate" many value chains out there.

Antoine Logean - 20 Oct 2016, 1:54 a.m.

Hi Müge,

The disruptive aspect of the blockchain technology on the service industry is in my opinion cristal clear. So we should as fast as possible start to build/implement blockchain driven processes. Indeed the best way to understand this technology is by using it. Are there already concrete blockchain implementations in the insurance industry ? If I would like to implement a blockchain system, are there frameworks/tool kits that I could use ?

Brad - 20 Oct 2016, 7:55 p.m.

Muge - How far away is the insurance industry to moving Blockchain into production?

Andreas Lindemuth - 27 Oct 2016, 1:53 p.m.

Hi Müge
This is indeed one of the most concise and understandable summaries of blockchain technology that I have found so far.
I struggle a bit to see blockchain's impact on the end customer (that is, the insured's) experience. Concretely, which improvements in the customer experience depend on blockchain and cannot be implemented with conventional, existing security technologies?

Ranvir Saggu - 7 Nov 2016, 10:49 a.m.


A great summary of what blockchain can do for insurance. I have been working with a Blockchain start up in the insurance space ( We agree with the benefits that it can provide by simplifying and speeding up processes. We think it can improve processes across all aspects of insurance - Internal and external interactions with all third parties.

We have also looked at how it can make the customer journey better and the identity aspects of blockchain are very important. We have developed a proof of concept system that show this and applied it to some use cases, e.g micro-insurance. This has demonstrated how blockchain solutions can deliver more appropriate products for customer.

I would be happy to discuss further.



James Hoare - 29 Dec 2016, 5:18 p.m.

Thanks Muge,
Great article. It seems to me that for the type of solution you are proposing covers the complete Insurance ecosystem, which is right if the benefits of Blockchain in Insurance are to be achieved. The barrier is in getting all the players to agree to the Blockchain with the requisite standards, protocols etc. Who is trying to do this. The technology will work, the issue is getting the insurers, brokers, reinsurers all lined up in the same direction! That will be the tricky bit!
Happy to discuss further.

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