MAY - JUNE8By Mary Kotch, EVP and Global CIO, Validus Insurance & Marie-Christine Razaire, Underwriter, Validus ReinsuranceThe Impeccable Benefits of BLOCKCHAIN TO INSURANCEust as the internet revolutionized how businesses communicate, Blockchain will revolutionize how businesses transfer data. Traditional insurance companies are ripe for disruption--they've held onto legacy technologies such as VSAM and COBOL from the 1950s and 1970s.Until recently, questioning the antiquated internal processes of the Insurance Industry bordered on sacrilege. However, increasing pressure from tech upstarts has revealed that old processes must give way to new efficiencies.Blockchain can create data efficiency where it has never before existed. What's more, the `logic' of contract creation and execution can be largely automated through the magic of Blockchain. Derivative contracts, once a black hole of information, can be assessed for risk and impact at the press of a button. Let's use a real-life example of how Blockchain can change the Insurance business.Consider a home owner applying for insurance. To price the risk correctly, the underwriter would like to know:· Is it really a wood frame?· When was it built?· Was the roof updated?· Does it have an alarm system? The insurer spends an exorbitant amount of time, money, and resources trying to verify these answers. This process is repeated year, after year, after year. The insurer then passes this information along to their broker, agents etc. where they repeat the process and pass to the reinsurer, and so on.What they need is a distributed, encrypted, immutable, trustless ledger.What they need is Blockchain.Opportunity: Eliminate the RedundancyFor simplicity's sake, think of Blockchain as having two components, Claims and Attestations. A Claim is a fact that an individual or organization puts on the immutable Blockchain. For instance, when my house was built, what my income is, or when I last checked my fire alarm batteries. An Attestation is when a 3rd party certifies that the claim is true. For instance, when my town verifies my property title, the IRS verifies my income, or my web-enabled fire alarms verify a test. Mary KotchJIN MY OPINION
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