August 16, 2018 | Written by: Craig Bedell
Categorized: Blockchain | InsurTech | News & Events
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Timing may not be everything, but in life and business it is a critical element for success. When it comes to blockchain in insurance, we may have just witnessed the perfect confluence of timing with people, process and technology. The American Association of Insurance Services (AAIS) is one of just two US insurance ratings and reporting agencies authorized under the NAIC Model Law to aggregate rating, policy and loss cost data from its 700+ member insurance companies. This allows the ratings bureau to provide analyses and regular compliance reporting to 52 US regulators, comprised of insurance commissioners for 50 states, the District of Columbia and US territories. AAIS is the only not-for-profit member organization serving in capacity.
AAIS recognized that a permissioned blockchain would be the perfect technology to lay down upon this existing network to improve the process of exchanging data between carriers, regulators and rating agencies. In what turned out to be an exercise in compliance, all of the participants would see an immediate improvement in the time, money and effort that has been basically a sunk cost for meeting compliance regulations.
Using the secure blockchain technology, AAIS created the Insurance Data Link, the world’s first open blockchain network for connecting data across the insurance industry. Through design thinking workshops led by the IBM Garage team, involving members from major insurance companies, state departments of insurance, and the risk management school of a major university, AAIS was able to scope out, build and deploy a production-level regulatory reporting blockchain platform called openIDL. Being open is as a critical term as its abbreviation, IDL, short for Insurance Data Link. AAIS has approached this program not as a single project but as an open, agnostic and cooperative environment to democratize information across the insurance industry in order to bring down costs, increase transparency and ultimately free up the innovators and competitors within individual carriers to do what they do best – offer risk management solutions.
Today, too much time, money and effort are spent on the fundamentals of basic risk, exposure and experience data. Additionally, regulators are dealing with antiquated data delivery channels and simply don’t have the ability to deal with the massive amounts of data that they do receive. AAIS sees that in the near term, regulators will be dealing with insights rather than data in order to best serve their constituents. This is why AAIS chose the Linux Foundation’s open-source Hyperledger Fabric, critical for the long-term future of its vision. They picked the IBM Blockchain Platform for its global enterprise qualities as well its ability to deal with multi-cloud capacities. As a not-for-profit organization, AAIS has stated that its intentions are to best serve the insurance industry by bringing new efficiencies and insight. Ed Kelly, CEO of AAIS has stated that with openIDL, AAIS will be better able to serve its members by freeing itself up from the labor of report creation and submission, to spend more time on the development of new insurance products, monitoring regulations and providing value added analytic services.
It appears that the right time has come with the right people to apply the right technology to an existing process that is desperately in need and demands transformation.
Read the official AAIS and IBM press release here.
Learn more about IBM Insurance here.
Learn more about IBM Blockchain for Insurance here.