What Blockchain Technology Could Mean for P&C Insurance in 2019

by on Jan 25, 2019

The insurance industry is historically slow to adapt, often placing it behind the curve when it comes to digital innovations. With 2019 underway, many people still call insurance brokers on the phone and legacy systems continue to hinder insurers’ efforts to fully embrace modern technology. However, the industry is surprisingly at the forefront in using emerging blockchain technology to store and transfer information. Since insurance involves several parties with conflicting interests concerning pricing and managing risk, implementing blockchain-backed systems automates and simplifies the complex processes involved in insurance transactions.

What is Blockchain Technology?

A blockchain, at a basic level, is a chain of “blocks” that digitally stores information on a distributed ledger that is universally accessible. Each block contains data about the transaction, a hash, and the hash of the previous block. Hash is a form of cryptographic security—comparable to a fingerprint—that identifies the block and its contents. Blockchain technology uses Peer to Peer (P2P) networks that validate blocks prior to them being added to the chain, and smart contracts that can be used to automatically exchange information within P2P networks.

Benefits for P&C

Blockchain technology helps to mitigate common issues when dealing with insurance, most notably detecting fraud and preventing risks. By using shared ledgers and smart contracts to issue insurance policies, the claims and payment processes can be automated to become more efficient, secure and accurate. Another benefit of blockchain technology is that it can quickly collect the widely dispersed data that is needed to resolve claims. P&C firms can potentially make claims processes up to three times faster and five times cheaper by using blockchain-backed systems. Smart contracts—enforceable by programmable code—could also improve a firm’s accountability and transparency because transactions must be approved by the P2P network. These factors could contribute to overall better user experience and higher client satisfaction within the P&C insurance industry.

Several P&C firms are already experimenting with blockchain technology for insurance products. For example, the Blockchain Insurance Industry Initiative (B3i) is a Zurich-based startup that explores the benefits of using distributed ledger technologies. The B3i is currently supported by 40 global firms, including Liberty Mutual, Chubb and Allianz. Nationwide is also testing the RiskBlock Alliance proof of insurance tool that would eliminate the need for paper insurance cards by verifying insurance coverage in real time.


Property and casualty firms should develop a working knowledge of blockchains and consider its opportunities and challenges. Some of the obstacles adopters will face include user education and training and legal restrictions that regulate the insurance industry. Insurance companies will also need to adapt to the digital processes within blockchain technology and learn how to secure sensitive information. Further examination of the risks of storing information in blockchains are necessary, but there remains an unparalleled opportunity for the insurance industry to be a leading adopter of this emerging technology.