36 ITAPro // June 2016 // www.emagazine.ITApro.org
Corner the Market
pants,” he says.
He makes a comparison to credit card networks: People
want to understand how those are used, but they use credit card
networks without knowing how they work. They just know a
payment is going to get from point A to point B.
“We are not there yet with blockchain technology because it
is not a very intuitive name,” says de Crespigny.
A second point is people look at blockchain and think how
they can fit this technology into their business. EY generally
recommends users look at the technology from a standpoint
where distributed infrastructure is ubiquitous and customers
control their data rather than the
service provider, according to de
“Instead of trying to fit the
technology into your business, fit
your business around the technology and come up with different
processes,” he says.
The third point to consider
is bit coin is revolutionary and a
powerful piece of technology, but
a lot of it remains theoretical. The
technology hasn’t been tested to
perform at that level with a local
network. Smart contracts, which
are pieces of code embedded into
the network, call for every participant in the network to check
that software to make sure it is
“If you have millions of
computers checking this code, it
is not efficient,” says de Crespigny.
“The technology hasn’t caught up
with the various applications. It
will get there and we will find a
different way of doing it. By then
people will have thought about
this different paradigm—whether it is blockchain technology
or something else—and it will force people to think about their
business in a different way.”
More Insurance Uses
de Crespigny believes blockchain technology can provide the
trusted backbone across which many participants in networks
can work. For example, if you look at claims processing there
may be a long value chain and the insurer sometimes is removed from the ultimate customer.
Blockchain can provide both the trusted network and a database where the carrier can track the claim through the system
and make sure all the checks and balances are addressed.
“From a technology standpoint, that sounds straightfor-
ward; the trick is to determine the implications from a business
process standpoint,” says de Crespigny.
EY sees future benefits with this technology. Its main
characteristics allow it to do what it does because it can store
everything in a way that cannot be changed. The technology
records everything that has been done so it knows what people
are allowed to do through prior activity.
“In this case, what it can do is provide an extensive audit
trail of everything that happened and collect data and effective-
ly store the data, which can then feed into improved actuarial
models or other risk-management processes,” says de Crespig-
ny. “Technology, in theory, can already do that, but blockchain
allows you to do it in a decentralized fashion.”
Blockchain also will allow insurers to integrate devices
through the Internet of Things and link cars onto a blockchain,
points out de Crespigny. The cars can then record certain
behavior of the drivers, service history of the vehicle, and miles
covered. Everything can be fed into actuarial models and stored
in a decentralized data store and be opened to various insurance
providers to develop actuarial models and insure specific cars in
certain market segments.
“That’s not how insurance is done at the moment, but when
you look at developing countries where people struggle with
credit histories, by being able to collect and store this data so no
one party has to take responsibility to build that up, can enable
financial services to be provided in places where insurance is
not applied in the same way,” says de Crespigny.
Some insurance companies are starting to dabble in what
they call smart contracts, adds Hertz. Policies are bound
electronically or by paper, but with blockchain you can create
these contracts where you know both parties and the customer is uniquely identified to the carrier and the carrier to the
“It provides greater flexibility to service your own policy
and do it in a way where you no longer need multiple checks
and processes, which ultimately will drive out costs and meet
expectations of the consumer,” says Hertz.
Where to Start
There are various applications that are enabled by databases and
you need to build the applications that are enabled by blockchain technology, according to de Crespigny. What insurers
need to do is figure out the business problem they are looking
to solve or the business solution they are seeking to develop.
From there, carriers can find vendors that want to establish
themselves as the vendors of choice and would have various
code libraries or have these specific applications.
“As part of that, you need to decide if you want to go down
the permission ledger route, which is the private blockchain, or
if you want to go down the public distributed ledger or one of
the other public blockchains because they provide total independence,” says de Crespigny.
For example, if you want to demonstrate something oc-
Angus Champion de