Interview with Parul Kaul-Green, Head of Innovation and M&A, AXA UK
“Blockchain can displace the roles of trusted third parties”
In the financial service industry, Blockchain could already gain a lot of traction. Why do people in the insurance industry need to pay attention to Blockchain?
Parul: To answer this let’ go to the inception of Blockchain. Blockchain was created 2009 following the Global Financial Crisis and was rooted in the lack of trust in Financial Intermediation. Questions were raised whether Intermediaries (Banks, Insurers, Custodians, Investment managers) were up to their job as fiduciary of global financial systems.
In this context, the overarching pain point that Blockchain solved was reinforcing trust. A mutual distributed ledger providing an immutable record of transactions with distributed trust and storage where numerous nodes allow people who don’t know each other, or trust each other, to come to an agreement that is validated, trusted and held as a matter of record.
Insurance, as one such financial intermediary, also has trust and engagement issues with its policy holder.
In my opinion, Blockchain as a technology offers a big threat for disintermediation on one hand and opportunity for efficiency, on the other.
How will Blockchain change the insurance industry?
Parul: Blockchain technology has both disruption and enablement potential for Insurance.
In disruption, Blockchain is being piloted to enable peer to peer insurance with parametric claims payment. This obviates the need for primary insurer. For e.g. Dynamis is a smart contract for peer to peer insurance running on the Ethereum platform. It provides supplementary unemployment insurance using the LinkedIn social network as a reputation system. Policy holders’ social capital to replaces underwriters.
The cases for enablement for the Insurance value chain are many from Fraud detection and risk prevention through to admin and claims cost reduction in customer onboarding and claims management.
A verifiable public record of all transactions, identities and proof of ownership of assets validated on the blockchain can displace the roles of trusted third parties and prevent duplicate transactions reducing costs.
What do you think is necessary for Blockchain to be adopted in the insurance industry?
Parul: A lot of people insurance industry are on wait and watch, on this one. We are waiting for wider scale understanding and adoption of technology in our stakeholder base, be it clients, supply-chain, service providers. As an industry, we are just dipping our toes in it and are not immediately convinced of the benefits of early adoption.
What do you see as the most promising use cases for Blockchain in insurance?
Parul: For me, micro-insurance is the most exciting use case. That we have staggering 4 billion people in this world who have no insurance and are left destitute at a relatively small loss event is morally wrong!
P2P blockchains with smart contracts applied to micro-insurances with parametric underwriting and claims from reliable data sources is truly exciting. For example, Pay-outs to insured farmers triggered during droughts or other weather events causing crop losses
What is your advice for insurance companies wanting to start with blockchain?
Parul: I would say that choose a use case which is small but impactful for your organisation.
There is no better way of being at ease with an emerging technology other than experimentation!
What are your favourite resources/websites to stay on top of innovation topics in the insurance space?
Parul: CBInsights, Wired, CoinDesk, altfi.com, fintechweekly, insurTechnews, medium.com
For Innovation management MITSloan management review, HBR
Parul Kaul-Green, CFA is the Group Head of M&A and Innovation, AXA UK. Parul is senior Corporate financier and Strategist with eighteen years of financial services experience. Her career spans Insurance, Asset Management, Private Equity and Venture investing working in companies ranging from Telecoms Start-up to multi nationals such as Citigroup, Aviva and now AXA.