Feeling Insured

Often times, considerations of the future social implications of decentralized technology present freshly differentiated images of somewhat superior methodologies that may be radically different from those of today. However, the decentralized registration of centrally controlled operations could instead be a marked degradation of the potential of the technology and of the promise of development. Without an equivalent prior structural change, the introduction of decentralized technologies in established industries wishing to strengthen rather than improve service offerings should be of concern to all of us.

In a well-known fact-based business school anecdote, a case of one of the earliest life insurance claims is often repeated. Shortly after this type of policy became available, a life insurance policyholder effectively died while their high yield protection was in applicability. When the family of the deceased tried to make a claim, the insurer drafted a new definition of how their business calculated “ one year ” so as to [successfully] avoid settlement.

Speaking of laudable industrial ingenuity or helpless profit would most likely depend on whether it is relayed in a conference on strategy or ethics. However, with that story in mind, we now turn to the introduction of blockchain technologies to the insurance industries:

ORLANDO, Florida – Blockchain technology has a future in workers’ compensation transactions as the technology has the potential to improve industry-wide communication and efficiency, a presenter told attendees on Friday. of the National Workers’ Compensation Insurance Board’s Annual Issues Symposium. a decentralized peer-to-peer network that provides insurers and stakeholders a way to “produce, store, manage and share data under the form of 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.

The blockchain consists of a distributed ledger, a consensus providing a “one-stop-shop” of information, cryptography for secure and authentic transactions, and smart contracts, which are executed automatically under predefined conditions, Mr. Meeusen. In a traditional insurance system, there is an inefficient flow of information from the policyholder to the insurer through the reinsurer and the capital market, he said. Mr. Meeusen explained how the technology works to create efficiencies rather than collecting and reviewing data in separate systems.

“We work together, but we keep control of our data,” he said.

For workers’ compensation, blockchain can allow stakeholders to share personal and medical information, providing a secure place to store and access the data. The technology would also make it possible to verify the coverage of comps on the blockchain platform, he said. The blockchain also enables real-time messaging and confidential information sharing across the industry, he added. “There is definitely an element of efficiency here,” Mr. Meeusen said. “May 19, 2018, Louise Esola on business insurance

Blockchain can indeed offer a transparent, decentralized and immutable record of digital data entries. There are also many possible extensions using automatically executable or complex triggered “smart contract” events. there is no doubt. However, the quality of the content is perhaps something that is often overlooked or simply encompassed in the excitement of the technology.

Replicating existing methodologies in new ways can mean giving up opportunities for improvement. In other words, regardless of whether an insurance policy is centrally owned by the issuing company or registered through decentralized technologies, it says nothing about its practical implementation. The same issuing company formulated and enforced the conditions.

The caveats, clauses, loopholes and conditions of many insurance policies that prohibit payments to policyholders are too numerous to list here in detail. Suffice it to say that for many they are a recognized part of the insurance process. Now steadfastly digitizing the terms and conditions of the insurance company with complexities that may not be fully understood by the individual holders of such policies only confers benefits on the issuing company.

Rather than a personal exchange, clarification or justification for any lack of understanding here, the holder’s digitally immutable, time-stamped agreement with such a document is forever locked. While the transparency of the documents themselves can be established, understanding and adherence to policy remains largely one-sided. The use of immutable documents is only beneficial if sufficient knowledge of the meaning or implications of such documents exists. A convoluted, one-sided policy is just that, whether on or off the blockchain.

The very presence and survival of the hugely profitable insurance giants should hint at the structure of the business. Ultimately, like a casino, the company’s calculations and metrics are superior to our understanding of probabilities.

Like a round at the blackjack table, a player’s odds of profit or his enjoyment in the risk of the stake itself outweighs what is essentially a guaranteed loss when measured over a sufficient timescale. . The house always wins. This is why there is the [well decorated and ornately furnished] house itself. Besides the investment strategies and the multiplicity of financial activities, its main insurance coverage exists because the house is betting that we policyholders are wrong.

For any business, paying more than what you get is not viable. Therefore, the range of insurance choices has been and continues to be available because purchasing them over a sufficiently long time scale earns the issuing company more than it costs it when purchasing it. payment.

This is not to marginalize a host of potential benefits, protections and security provided by insurance offerings. As with automobile accidents for example, in a cost-benefit analysis, deference to experienced centralized giants for resolution may simply be cautious and well worth these costs, especially given the possible time demands of the alternative. . It is simply a question of saying that in all insurance offers, the house [an insurance company] exists because it remains profitable.

When blockchain technologies are supposed to be a panacea for the development and future of the industry, maybe we should all take a step back and ask ourselves if we really understand the policies themselves before we get too excited about them. immutable record.

Source by Charles Anderson

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