27 June 2017 07:00
The insurance industry can take advantage of the blockchain. It will enable him to secure transactions, reduce the costs related to the compliance and combating fraud.
Clement Francomme is the CEO ofUtocat, a technology firm that has seen the light of day in 2014, in Lille in France, and specializes in the automation of banking services. The young company counts among its clients, BNP Paribas and AXA, in which it implements its interface Blockchainiz.
At the beginning of April, Mr. Francomme was crossing InsurTech Quebec, an event held in the framework of the Week of the digital to Quebec. There are described the blockchain as a » book of accounts decentralized «. It has long been associated with the cryptomonnaie, such as Bitcoin. Its properties, however, are much more extensive.
The e-wallet allows you to connect users, no matter the software used. There is enough of a connection to the Internet. It is the network that guarantees the validity of the transaction with the participating merchant.
The economic system that stems from Bitcoin’s expansion over the past 18 months, after a slow start. The market capitalisation varied widely from 2014, but which is more stable, it is the upward trend in the volume of transactions processed.
In 2016, it has surpassed the mark of 200,000 transactions per day. Six months later, it comes to 300 000 transactions. It is still 1,000 times less than the transactions processed by Visa. Mr. Francomme is estimated that within ten years, the treated volume is closer to them if the growth continues on the same exponential curve.
The percentage of the cost of the volume of transactions has dropped to 1% in 2016, and this is close to the 0.5 per cent currently. The average cost is already similar to that of the systems of payment-traditional, writes M. Francomme.
Infrastructure is decked out with a digital trace
The associated technology has enabled the creation of financial information that is » irreversible and permanent «, says Mr. Francomme. The underlying infrastructure of the blockchain allows you to disguise every transaction of a digital trace, with the date and time, and then join the other transactions to be performed by the user and its counterparties. It retains the evidence of the work carried out for each block in a transaction. These blocks are held by the users themselves, and not by a central authority, which has become unnecessary in this context.
Each new block is connected to blocks in the past. The computing power required to edit the entire registry would be such that the cost becomes disproportionate. The register thus created is tamper-proof, » continues Clement Francomme. «The registry, once released, is a guarantor of the information that is being stored there. It becomes the cement of digital which makes it very complicated rewriting of the story that it tells, » he says.
The cost of an attack on the network greatly exceeds the earnings associated with the normal use of the system. According to him, the same principle applies when installing a alarm system in a sophisticated home. It wants to increase the effort required by the thief to the point of encourage them to go purchase elsewhere the goods he covets.
Open and accessible
The transactions in the system are accessible in the clear. It is enough to have installed the software of transaction, peer-to-peer (P2P) and connect to the network. We can go back in time to find the trace of all information associated with the transaction.
The environment creates a digital confidence, which helps to secure relationships between users. Thus, we can certify documents and follow the procedures associated to the execution of contracts. For banking services, it already uses the blockchain for asset management and the automation of internal processes. Mr. Francomme cites the example of verification of signatures and of the resulting decisions.
He says that the cost of monitoring compliance rules affecting the financial services is greatly reduced, thanks to the traceability of accelerated transactions. The regulatory framework requires financial institutions to appoint the parties to the transaction. The interface developed in Utocat is already compatible with the european Union legislation regarding the protection of personal information (GDPR) which will come into force in may 2018.
Uses in insurance
Fraud classic insurance is to obtain coverage from several insurers for the same property. Each insurer may keep its register of subscriptions in a blockchain. An application allows him to verify at the time of purchase that the object that he has agreed to provide has not already been provided by a fellow partner. The reading of the information is always free. It is the writing that is charged, he said.
In a private network, the insurer may use encryption keys to protect the confidentiality of certain data. The traceability of digital changes persist in time.
You can also automate the phases of the disaster declaration and reimbursement, » continues Clement Francomme. The insurance contract is recorded in the form of a program (smart contract) that is automatically launched thanks to information provided by a source of data certified. Once the existence of a claim confirmed, the insurer may repay more quickly the insured.
Redemption of life insurance
In life insurance, you can also schedule the redemption process using the blockchain. In certifying the various stages and ensuring the rights of access of each party to the contract, it eliminates the disputes, he says. The real-time monitoring helps reduce the cost of framing. The insurer may as well devote additional resources to activities that add value to its offer, such as the council.