Often, considerations of the future societal implications of decentralized technology present newly differentiated pictures of somehow superior methodologies that may be radically different from today’s. However, decentralized recording of centrally controlled operations could instead be a marked degradation of both the development potential and promise of the technology. Without equivalent prior structural change, the introduction of decentralized technologies into established industries that want to bolster rather than enhance service offerings should be of great concern to everyone.
In a well-known fact-based business school anecdote, a case of an early life insurance claim is often repeated. Shortly after this type of policy became available, a life insurance policyholder died during the term of his high-payout protection. When the family of the deceased tried to claim, the insurer wrote a new definition of how her company calculated ‘one year’ for [successfully] avoid settlement.
Talk of commendable industrial ingenuity or helpless speculation would probably depend on whether it was broadcast at a strategy or ethics conference. However, with this story in mind, we now turn to the introduction of blockchain technologies within the insurance industries:
“ORLANDO, Florida – Blockchain technology has a future in workers’ compensation transactions as it has the potential to improve communication and efficiencies throughout the industry,” a presenter told attendees at the National Council’s Annual Issues Symposium of Insurance Compensation Inc. on Friday. a decentralized peer-to-peer network that gives insurers and stakeholders a way to “produce, store, manage and share data as a secure record of transactions,” said Paul Meeusen, head of distributed ledger technology and director of financial reinsurance at Swiss Re and CEO of B3i.
Blockchain consists of a distributed ledger, consensus that provides a “single version” of information, cryptography for secure and authentic transactions, and smart contracts, which are executed automatically under predefined conditions, Meeusen said. In a traditional insurance system, there is an inefficient flow of information from the policyholder to the insurer, to the reinsurer and to the capital market, she said. Mr. Meeusen explained how technology works to create efficiencies instead of collecting and examining data in separate systems.
“We are working together, but we remain in control of our data,” he said.
For workers’ compensation, the blockchain can provide stakeholders with opportunities to share personal and medical information, providing a secure place to store and access data. The technology would also allow verification of compensation coverage on the blockchain platform, she said. Blockchain also enables real-time messaging and confidential information sharing across the industry, she added. “There’s definitely an efficiency component here,” Mr. Meeusen said.” May 19, 2018, Louise Esola on Business Insurance
Indeed, the blockchain can offer a transparent, decentralized, and immutable record of digital data inputs. There are also numerous potential extensions that use automatically executable or complex triggered “smart contract” events. This is without a doubt. However, the quality of the content is perhaps something that is often overlooked or simply subsumed under the excitement of the technology.
Reproducing existing methodologies through new media may mean giving up opportunities for improvement. In other words, regardless of whether an insurance policy is centrally maintained by the issuing company or registered via decentralized technologies, this says nothing about its practical implementation. The same issuing company forms and enforces the terms.
The caveats, clauses, loopholes, and conditions of many insurance policies that prohibit payments to holders are too numerous to list here in detail. Suffice it to say that for many they form a recognizably accepted part of the insurance process. Now immutably digitizing insurance company terms and conditions with complexities that individual policyholders may not fully understand only confers benefits to the issuing company.
Instead of a personal exchange, clarification or justification of any misunderstanding, here the holder’s digitally immutable and time-stamped agreement with said document is forever locked. While the transparency of the documents themselves can be established, understanding and compliance with the policy remains largely one-sided. The use of immutable logs is only beneficial as long as there is sufficient knowledge of the meaning or implications of these logs. An intricate and one-sided policy remains just that, whether on or off the blockchain.
The very presence and survival of the hugely profitable insurance giants should hint at the corporate structure. Ultimately, as a casino, the company’s calculations and metrics are superior to our understanding of probability.
Like a round at the blackjack table, the chance for a player to win or enjoy the risk of participating itself outweighs what is essentially a guaranteed loss when measured over a sufficient time scale. The house always wins. That’s why there is [well decorated and ornately furnished] house itself. Investment strategies aside, as well as a multiplicity of financial activities, at its core is insurance coverage as the house is betting that we, the policyholders, are wrong.
It is unsustainable for any business to pay more than what it receives. Therefore, the range in the choice of insurance has been available and continues to be available, as the purchase of these, over a long enough period of time, earns the issuing company more than it costs them to pay. .
This is not to sideline a host of potential benefits, protections, and security provided by insurance offerings. As with car accidents, for example, in a cost-benefit analysis, one’s deference to experienced centralized giants for resolution may simply be prudent and well worth such costs, particularly in consideration of potential requirements. of time of the alternative. It is simply stating that in all insurance offers, the house [an insurance company] it exists because it remains profitable.
When blockchain technologies are presented as a panacea for the development and future of the industry, perhaps we should all take a step back and ask ourselves if we really understand the policies themselves before getting too excited about their immutable record.
