Following up on the investment Xceedance made last November in ChainThat, a UK-based blockchain specialist, we sat down with Arun Balakrishnan, CEO of Xceedance, and Dave Edwards, CEO of ChainThat to talk about the future of blockchain in insurance. This is part one of that conversation.
Question: What do you see as the advantages of the Xceedance/ChainThat partnership?
Arun: We’re always looking for new technologies to actualize our target operating models and those of our clients. There’s obviously a great deal of promise for blockchain, as well as a high degree of inevitability. The world, in fact, needs to move toward the security and neutrality afforded by blockchain. Since that wheel has already been invented so to speak, we opted to invest in it, rather than try to re-invent it. And the blockchain expertise of ChainThat is complemented by our insurance expertise.
David: We’ve been building our blockchain capabilities for more than two years. When we started talking with Xceedance, we quickly realized even more applications and advantages of the technology in insurance. We’ve now done proofs of concept, built products based on the blockchain framework, and started to engage insurers and reinsurers. But this is not a typical business development or market engagement process. Since no company yet has a Chief Blockchain Officer, we must seek multiple insurance organization players in every discussion, and that can be a challenge. But, we do have some interesting models which could help drive engagements and adoption. With Xceedance, we can reach more of those players, benefit from the insurance expertise of Xceedance, make our offerings better, and scale more quickly.
Question: Blockchain is a pretty broad term. Is there anything specific to insurance about what you’ve developed?
Arun: ChainThat has developed an insurance-specific framework that sits on top of the blockchain platform and can plug into any of blockchain platform to provide security for data storage, transactions, messaging, and more. The framework contains the necessary APIs and GUIs to ensure cross-platform flexibility.
David: Exactly. Since blockchain will continue to evolve — and since there will be myriad blockchain providers — we want to be as agnostic as possible to accommodate the greatest number of prospective users. For now, we do see a clear leader in blockchain and distributed ledger technology (DLT). It’s the R3 Corda platform which has managed to solve the key security and privacy issues many platforms still face today.
Question: How many aspects of the insurance lifecycle will blockchain be able to support?
Arun: I think it’s fair to say most if not all of them. For policies and claims, we can manage the processes of communication and transaction between all the requisite parties. We can generate technical, cash, or other financial accounts to fund premium-payment and claim-settlement processes.
David: For reinsurance, we can place contracts, negotiate them, and bind them. We can generate treaties. We can create the appropriate technical and financial accounts, as well as make payments related to multiple contracts and the associated premiums. We can manage settlement processes. And we can trigger the payment calculations that need to be made by the banks. Practically speaking, we see blockchain being able to support any aspects of coordination between parties, and helping to reduce frictional costs in the business of insurance.
Question: Where do you see the Xceedance/ChainThat partnership fitting into B3I? Will it?
David: B3I is doing a great job of promoting blockchain and awareness of it across the industry. It appears there are now about 15 member companies in the B3I consortium, with another 15 organizations testing their proof of concept. But we should bear two complementary thoughts in mind: First, B3I started as an exploratory effort to establish if it can really bring benefit to the industry. There hasn’t been much concrete development made public yet, although the latest news is that they are about to form a new operating company to help drive the adoption. Second, since blockchain is essentially a distributed ledger network, the technological progress will be accessible for adoption by all parties in and to the industry, within and outside B3I. As B3i progresses, I am sure they will see the advantages of working with pioneers such as ChainThat. That’s because we have ensured an API-driven platform and framework, so integration with B3i, should it happen, would be relatively straightforward.
Arun: In my view, rather than there being one path to each blockchain situation or opportunity, there will be many. And that’s as it should be. Given blockchain’s neutrality, that kind of democratization, if you will, seems quite fitting.