Patrick Schmid, PhD, MA, is vice president of The Institutes RiskStream Collaborative®. He previously headed The Institutes’ Enterprise Research Department; served as director of research for the Insurance Research Council (IRC), a division of The Institutes; and worked as an economist for Moody’s Analytics. Schmid has taught economics and finance at Philadelphia colleges and universities.
Blockchain technology is beginning to modify insurance operations, helping the industry to overcome some of its challenges. The use of different blockchain technologies within business, including in the insurance industry, varies according to its inception.
Cryptocurrency, like Bitcoin, has been around for more than a decade, but institutions (including insurers) are now starting to hold it as a hedge against inflation.
Enterprise blockchain, in which a private permissioned blockchain network is leveraged to share data and improve multiparty business processes, launched a little over half a decade ago and is just now showing signs of moving toward production within insurance.
Newer uses of blockchain technology — such as decentralized finance, non-fungible tokens and decentralized autonomous organizations — are on the near-term horizon for the industry.
Each of these blockchain technologies will play a role in redefining the insurance industry in the years to come.
For industry professionals, and for everyone else looking to these technologies, it’s paramount to understand exactly what we’re working with. Below is a list of some key terms used in this…
