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Blockchain in insurance: promise for the future


Blockchain is likely to play a major role in the reshaping of insurance — but the big implications are two to three years out. (Photo: iStock)
Blockchain is likely to play a major role in the reshaping of insurance — but the big implications are two to three years out. (Photo: iStock)

Blockchain is a revolutionary technology that could fundamentally change the way business is conducted and result in the restructuring of major industries.

At least that is the view of some prognosticators. Others believe that there are important implications for the technology, but that it will not be truly disruptive.

What about insurance? Will blockchain be a major force in the industry, and if so, when? New research by SMA sheds some light on these questions. The short answer is that blockchain is likely to play a major role in the reshaping of insurance — but the big implications are two to three years out.

Blockchain has burst onto the scene. Many in insurance are still just becoming aware of its importance and are in learning mode. At this stage, slightly over half of property and casualty insurers are aware of blockchain and are beginning to understand its implications, while only about 20 percent of life and annuity insurers surveyed know about the technology.

Wide range of potential uses

What makes blockchain so powerful is the wide range of potential use cases. As a foundational technology, it becomes an enabler for peer-to-peer insurance, micro-insurance, digital currencies/payments, smart contracts, and the exchange of all manner of sensitive documents. None of these require blockchain, but in every case, blockchain makes the transactions more secure, improves efficiencies, and makes new business models more feasible.

Life and annuity insurers see the exchange of sensitive documents with prospects and customers as the top potential use case for blockchain in the next few years. P&C insurers are looking to a wider range of use cases with high potential, such as micro-insurance, peer-to-peer insurance, and digital payments.    

All sectors of the insurance industry increasingly see blockchain as important and potentially transformative. However, the level of investment and projects are still relatively low. About one in eight P&C insurers are developing strategies with blockchain in mind and moving to pilot projects. Only 3 percent of life and annuity insurers claim to have any activity regarding blockchain.

Several of the global insurance players are participating in blockchain consortiums, investing in startups, and/or implementing live projects with blockchain. Another important consideration is the emergence of over 20 InsurTech firms anchored by blockchain.

Contributing force to insurance transformation

Blockchain does show great promise for the insurance industry. There are likely to be more projects, investments, consortiums, and production implementations based on blockchain over the next two to three years as the industry gains experience with the new technology. Then it will not be surprising to see a wave of many blockchain-based initiatives ripple across the industry and become a contributing force to industry transformation.

For more information on the InsurTech startups, business use cases, and insurer blockchain projects, see the new research report "Blockchain in Insurance: Insurer Progress and Plans."

Mark Breading is partner at Boston-based SMA. Email him at This article first appeared on and is reprinted here with their permission. Opinions expressed in this article are the author's own.

Related: Emerging technologies: Best dream or worst nightmare for P&C insurers?


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