Personal Lines Pricing & Analytics Seminar 2018 Tuesday 22 May 2018
sli.do #Pricing2018 1
2
Some insights into the fast moving world of blockchain in insurance Nelson Henwood
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Presentation Outline
What is blockchain?
Public vs Private
blockchains
Some interesting use cases in Australian financial services
Blockchain in Insurance –
potential use cases and examples
Some other interesting
projects
Final thoughts
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
What is blockchain?
A distributed ledger of transactions
Satoshi’s Bitcoin
The blocks in the chain
Blockchain transactions
Key features
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
A blockchain transaction
Source: G2Crowd sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Who is Satoshi?
Satoshi Satoshi #2 #1
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
A few other concepts
•Maps data of arbitrary size to a string of fixed size •Designed to be a one-way function
Cryptographic Hash Function
•A hash of this creates a transaction address •Verifies transaction was created with your private key without revealing it Public Key
•Used to sign transactions broadcast to the blockchain •If revealed, anyone can pretend they are you – and steal your crypto Private Key
•Means for new crypto currency / token venture to raise funds •China and US regulation
Initial Coin Offering (ICO)
•Self executing contract based on computer code •The code resides on the blockchain and enables logic to be applied to a transaction Smart Contract
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
When is blockchain valuable?
Multiple parties share
data
Multiple parties update
data
Requirement for verification
Intermediaries add cost or complexity
Interactions are time sensitive
Transaction interaction
Source: https://www.pwc.com/gx/en/industries/financial-services/publications/blockchain-technology-might-transform-wholesale-insurance.html
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Public blockchain
Source: https://www.pwc.com.au/publications/pwc-blockchain.pdf
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Private blockchain
sli.do #Pricing2018
Source: https://www.pwc.com.au/publications/pwc-blockchain.pdf
11
Some Use Cases in Australian Financial Services
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
ASX will be replacing CHESS with a blockchain based system
CHESS is 25 years old
Private Blockchain solution – licensed participants only
Forming an exact chain of title over time
Advantages – efficiency, reduced reconciliation, more timely transactions and better quality data
A prototype DLT has already been implemented and tested
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Crytpobonds and Bank Guarantees
Debt Capital Markets •Prototype blockchain •Queensland Treasury Corporation •Smart contract to manage issuance, transfer of ownership and coupon
payments •Digital currency used to facilitate payment for the bond
Bank Guarantees for Commercial Property Lending •Digitised on a blockchain solution with nodes for tenant, landlord and
bank •Smart contract ensures nodes can only undertake permitted actions
on the shared database •Transaction encryption ensures confidentiality
sli.do #Pricing2018
14
Some Insurance Use Cases
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Some Insurance Use Cases
Blockchain verified customer
data
Claims Management Disintermediation
IoT Integration Parametric Insurance
Platforms and Ecosystems
sli.do #Pricing2018
16
Blockchain verified customer data
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Identity Management - Sovrin
Public, permissioned blockchain
Keys and identifiers
Claims
Disclosures
Consent Receipts
Source: https://sovrin.org/wp-content/uploads/2018/03/How-Sovrin-Works.pdf sli.do
#Pricing2018
Copyright© Finity Consulting Pty Ltd
Civic
Secure, low-cost identity verification on the Ethereum
blockchain
Decreases cost of identity verification for service providers
Improves security of personal information for users
Token incentives for Users and Validators
Source: https://www.civic.com/ sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Datum
Sources: 1. https://datum.org/ 2. https://calc.datum.org/
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Fraud Protection
1.6 million diamonds stored on the blockchain
sli.do #Pricing2018
21
Disintermediation
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Disintermediation – the role of Brokers
Less need for admin and data transfer
Automated processes
Expect efficiency gains – pressure on commissions?
Focus on more value added advisory services
Blockchain = disintermediation
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Fynance
German digital broker Fynance app
Expect the industry will move to B3i
standard blockchain
50% efficiency gains for their business +
lucrative commissions
ICO to raise funding to buy up broker
portfolios
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Peer to Peer Insurance
What is a DAO?
Advantages for P2P insurance
Challenges
Source: https://www.the-digital-insurer.com/blog/insurtech-teambrella-and-the-third-wave-of-peer-to-peer-insurance/
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Some Peer to Peer Startups Teambrella • Team mates make reimbursement payments from crypto wallets • Includes voting on policy rules, team members, risk premiums, claim payments • Bike and Pet “teams” implemented in Europe and South America
Dynamis P2P • Ethereum based smart contract DAO • Provides unemployment insurance • Uses social media footprint to identify individuals
Picnic Insurance • Australian based P2P (member’s collective) • Seeking APRA licensing • ICO mid 2018
sli.do #Pricing2018
26
IOT Integration (Mobility Data)
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Telematics / Mobility Data Dovu • First mobility cryptocurrency • Distributed marketplace for transport data
Cybercar • Blockchain based connected vehicle platform • Brings trust and integrity to data
Toyota • Mobility data ecosystem • Accelerating development of autonomous driving technology
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
MOBI
Announced 2nd May
Key partners Objectives
Projects Why blockchain?
sli.do #Pricing2018
29
Parametric Insurance
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Parametric Insurance - Oracles
Software Hardware Inbound Outbound Consensus
Sources: • The Blockchain – the Ultimate Disruptor. Tim Lea presentation to ANZIIF Insuretech Conference • https://blockchainhub.net/blockchain-oracles/
Types of Oracles
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Fizzy – Flight Delay Insurance
Startup backed by AXA
4 click purchase
Information stored on Ethereum blockchain
Currently in beta phase so limited to a single route (CDG to JFK)
Source: https://fizzy.axa/ sli.do
#Pricing2018
32
Platforms / Ecosystems
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
B3i Consortium
Property Cat XOL Product Developed
Consortium to standalone company
Prototype produced September 2017
Private and shared ledger elements
Quote, bind, settlement
Source: https://b3i.tech/our-product.html sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Galileo Platforms
Blockchain based eco-system
Smart contracts covering entire policy lifecycle
Launching in October 2018
Why blockchain?
Source: http://www.galileoplatforms.com/what-we-do/ sli.do #Pricing2018
A few interesting projects…
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Golem
Decentralised supercomputer
Airbnb of cloud computing
App registry for software
developers
GNT token for payment
Focus on machine learning
Source: https://golem.network/doc/Golemwhitepaper.pdf sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
Syapse.ai
sli.do #Pricing2018
Concluding Thoughts…
sli.do #Pricing2018
Copyright© Finity Consulting Pty Ltd
My thoughts on all this….
It’s early days..
It will impact my job
Converging technologies
A lot happening
in insurance!
sli.do #Pricing2018
40
Questions and comments?
sli.do #Pricing2018
Contact
Nelson Henwood
Director
Tel: +61 2 8252 3460
Mobile: +61 438 656 341
Email: [email protected]
sli.do #Pricing2018
Distribution & Use
Reliance & Limitations This presentation has been prepared for the Finity Consulting Personal Lines Pricing & Analytics Seminar, held on 22 May 2018. It is not intended, nor necessarily suitable, for any other purpose. Third parties should recognise that the furnishing of this presentation is not a substitute for their own due diligence and should place no reliance on this presentation or the data contained herein which would result in the creation of any duty or liability by Finity to the third party.
Finity wishes it to be understood that the information presented at the Seminar is of a general nature and does not constitute actuarial advice or investment advice. While Finity has taken reasonable care in compiling the information presented, Finity does not warrant that the information provided is relevant to a particular reader’s situation, specific objectives or needs. Finity does not have any responsibility to any attendee at the conference or to any other party arising from the content of this presentation. Before acting on any information provided by Finity in this presentation, readers should consider their own circumstances and their need for advice on the subject – Finity would be pleased to assist.
Copyright©Finity Consulting Pty Ltd