Recently a lot of articles have appeared on the internet pertaining to Blockchain technology and its supposed endless applications for the development of, for example, services for small and marginal farmers, healthcare infrastructure and inclusive finance.
Microinsurance entities are usually looking for ways to limit their expenses and widen their outreach and risk coverage options. So they are wondering whether this technology might be beneficial and if so in what way.
This Expert Forum will explore this question together with technology experts Michiel Berende and Kevin Day from RISKebiz Inclusive Finance Blockchain Solutions and moderator Annette Houtekamer from the Microinsurance Network.
Questions to be addressed will include:
- Why is blockchain technology of interest to microinsurance entities and even to the insured directly?
- How does it work?
- Will it disrupt the market and the competition or on the contrary solve the gap between demand and supply?
- What types of risks are suited to be covered?
- For what aspects in insurance can blockchain technology be used? (underwriting, policy issuance, premium collection, claims payments, other)
- What are the costs involved in terms of software, hardware and advice?
- Where can the cost and benefits be expected?
- Are use cases being developed in insurance, and if yes in what type(s) of insurance?
Some background information about Blockchain technology
Currently, most people use a trusted middleman such as a bank to make a transaction. But blockchain allows consumers and suppliers to connect directly, removing the need for a third party.
Using cryptography to keep exchanges secure, blockchain provides a decentralised database, or “digital ledger”, of transactions that everyone on the network can see. This network is essentially a chain of computers that must approve an exchange before it can be verified and recorded.
Source of image: Financial Times
The technology can work for almost every type of transaction involving value, including money, goods and property. Its potential uses are almost limitless: From collecting taxes, to enabling migrants to send money back to family in countries where banking is difficult. Blockchain could also help to reduce fraud because every transaction is recorded and distributed on a public ledger for anyone to see.
How the Blockchain works
Click here to find out (YouTube)
Some possible applications of the Blockchain in use cases
One can almost instantly see the possibilities to utilise this technology to solve the issues of high distribution costs in the sales of microinsurances in countries in the South.
In theory, if blockchain goes mainstream, anyone with access to a mobile phone will be able to use it to make transactions. Currently, only a very small proportion of global GDP (around 0.025%, or $20 billion) is held in the blockchain, according to a survey by the World Economic Forum’s Global Agenda Council. But the Forum’s research suggests this will increase significantly in the next decade, as banks, insurers, and tech firms see the technology as a way to speed up settlements and cut costs. Inclusive finance, thus microinsurance as well, is seen as the next step to proof the concept.
Additional aspect to take into account
Besides the technical aspects of blockchain technology, there will be a need to understand the regulatory issues, which are constantly evolving. These include not only finance and insurance regulations, but also the use of cryptocurrencies like Bitcoin and other digital assets in general. There are different rules and requirements regarding money transfer, anti-money laundering (AML), know your customer (KYC), etc.
Pending the outcome of this first Forum on Blockchain technology the Microinsurance Network will organise a second one to further deepen areas of interest in this topic.
What are Expert Forum?
Expert Forums are a great opportunity to learn about the latest trends in microinsurance, exchange expertise and stay ahead of the curve. They are designed in an interactive manner, enabling participants to raise questions and participate in in depth discussions on specific topical areas for development of the sector.
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