A very long time ago a professor in a business school class said “you have to differentiate between things that are important and things that are urgent”.
That may very well be the most valuable lesson I learned in business school – although it’s one I constantly wrestle with.
I bring this to your attention, dear reader, because there’s been a very important series of blog posts sitting in my “drafts” folder for weeks now. I should have finished and posted them a month ago, but more “urgent” things kept coming up. Mea culpa.
So enough of my time-management problems – here’s what’s so important.
Writing in IAIABC’s Perspectives, Jeff White said:
Even more unconventional P2P insurance models are planning to go to market in 2017, some with the intent to cut out the insurance company altogether. Their
plan is to initially appeal to the one-third of the U.S. population that is wildly open to sharing money and property, even if they have never met each other in person before. These companies are adopting models taken straight out of the current Fintech playbook using crowdfunding, microfinancing, and P2P lending models as their guide.
Jeffrey Austin White is the smartest person I know in work comp. Jeff also has the unique ability to instantly grasp highly technical issues and, more importantly explain them to the rest of us so that we understand the issue, AND get its implications.
You need to read his article, because it explains precisely what the future – peer-to-peer networks, crowd-funding, blockchain – holds for healthcare and workers’ comp.
This future has huge implications for buyers, regulators, suppliers, and other stakeholders. A few examples:
Teambrella will push the limits of our current regulatory system by allowing members to cover their own risk using a distributed network based on the blockchain.
Teambrella’s model will [be]… funded by a closed community of users without a license or the backing of an insurance company, a centralized authority, or state regulators. What? Are they allowed to do that?
Lemonade is one of several new companies, or platforms, that is re-inventing mutual insurance, by operating under what is now referred to as a Peer-to-Peer (P2P) network. This network allows customers to form groups and finance their own claims from a shared pool of funds with excess covered by a re-insurer. In the true P2P model, money left over in the pool, which would normally be profit for the insurance carrier, is either refunded back to the individual participants, paid forward to the next year’s premiums or, in the case of Lemonade, donated to a charitable organization.
Several major organizations are currently engaged in an international insurance pilot project based on blockchain technology. Aegon, Allianz, Munich Re, Swiss Re, XL Caplin and Zurich are among 15 companies that recently announced the launch of the Blockchain Insurance Industry Initiative — B3i.
I’m going to dig deep into this in the next post.
The implications of Blockchain within insurance and WC is extremely profound – if it works.
As with other IOT applications, it looks to eliminate the “middlemen” which in the insurance world is everything from Brokers to the TPA’s as well as everything in between. As we have seen with Uber and Airbnb, they are not “into” regulation and ignore it until directed otherwise.
However, if you look back to the origins of insurance (think Lloyds Coffee Shop) that is how it all started. Back then there was a big book that recorded the transactions, now they want to replace that with a computer (or more appropriately a number of computers) to keep the transactions. It is not a question of if, its a question of when. The challenge will be “where does regulation and taxation come in” if it does at all and how will you make that happen?
So yes, there are a lot of smart people starting to think and get involved in Blockchain for the insurance world before it is too late.
The Lemonade idea struck a cord; back in the 80’s when I was farming, I would purchase Workers Comp coverage through Farm Bureau/State Compensation Insurance Fund. If everyone did well and behaved we got a dividend check at the end of the year. Amazing how there never really is “anything new under the sun”.
Joseph,
Thanks for your insightful article. I’ve been learning and writing about the blockchain for awhile. As an attorney with WC experience, I didn’t know about this.
Thanks!