Blockchain is for dogs and cats

blockchain c'est pour les chiens

On September 13th, Axa published a press release very noticed about the launch of Fizzy : parametric insurance coupled with a blockchain technology. I remain skeptical about the arguments, especially regarding the blockchain.

Operating Principles

The principle is simple! The insurer provides coverage against aircraft delays that triggers automatically without the need for a claim by the insured. It’s a simple product that lends itself well to parametric insurance. However, a nuance, the data made available by air operators or airports are limited, which now forces AXA to limit the exercise only on flights to / from Paris Roissy Charles de Gaulle airport.

The use case approaches so much (not to say almost identical) to the offer proposed by Bajaj Allianz last spring , which we echoed here. There was already talk of Blockchain, and I was already dubious at the time!

The complementary element that Axa brings is the principle of an open blockchain known to all (at least specialists): Ethereum. This makes it possible to use smart contracts, and according to Axa, to secure exchanges and transactions.

Useless technology use?

2 points disturb me in these proposals (Bajaj and Axa).

Useless technology

First of all, there is no need to use a blockchain technology to manage parametric insurance. This type of product, although still not widespread today, is not new and is already working. For example, Swiss Re proposed earlier this year in Taiwan a dedicated parametric solution aquaculture in Typhoons . If it rains more than 480mm for 2 consecutive days, the insurance is triggered, and the loss is automatically settled on the agreed bases.

The concept of parametric insurance (or index based insurance in English) is based on products built ad-hoc with objective and measurable parameters made available by third parties. Thus, during the subscription, the insured person covers himself for a measured risk and for an agreed amount.

At the occurrence of the risk (and if possible with data that are automatically provided to the system, from the weather services in the case of SwissRe), a simple rule engine integrates and interprets the incoming data flow to trigger a automatic transfer to the insured.

In short, IF (rainfall> 480mm AND days> 2) THEN Reimbursement.

In other words, no need for blockchain for that. Nevertheless, it is feasible with the blockchain, but it is a debauchery of useless energy! In the case of Axa or Bajaj, we bet that the objective is more to realize a proof of concept to validate the principles before considering other implementations.

Specious argument

The argument invoked by Axa to justify the use of the blockchain is security.

  • On the one hand, parametric insurance is not in itself a lack of security to justify an additional layer
  • On the other hand, the blockchain has not proved its lack of risk.

I come back to this last point! The blockchain is, by nature, secure! I will not come back here on the operation, a lot of documentation exists on the internet. However, more precisely, it secures what has entered, but does not prevent in any case, fraudulent maneuvers before entering or leaving the blockchain. Thus, we have seen in recent years theft operations / truanderies around the currency bitcoin, which have put on the straw several large operators of this currency.

The security argument seems so slightly usurped! It’s a marketing attempt to cover what ordinary people do not understand!

The blockchain is for dogs and cats or rare usecases of the blockchain

Make no mistake: I am rather in favor of blockchain technology! On the other hand, I am looking for real cases of use relevant to insurance. To this day, I only see one!

Pros and cons of blockchain

The blockchain has several advantages:

  • Decentralization of nodes within a network.
  • self-correction if a network node is altered or modified (this is what justifies the security argument)
  • Data Encryption

However, several important limitations apply:

  • Reduced” scalability”: performance is bad as volumes grow too much
  • Operational costs: it is a very energy-intensive technology. (eg power consumption of data centers / computer centers that” mine” bitcoins)
  • Difficulty of implementation between multiple actors who must share the same technologies and solutions.

Thus, despite the obvious strengths, the fact remains that the concrete use of the blockchain is complex.

The blockchain is for dogs!

To date, only one use case has caught my attention as a true viable example of the blockchain in insurance. It has been reported in the Market Force report. . This is to use the blockchain in the UK for insurance contracts for dogs and cats (and more generally it could be extended for any animal). All insurers can then share a common risk basis (animals) to ensure that a health expenditure for an animal is subject to only one insurer and thus avoid fraud. This is possible thanks to the blockchain, which simplifies the procedure and makes it faster and more reliable. Volumes are manageable without major performance difficulties, and lower regulation than for individuals makes more in-depth controls necessary.

Beyond this specific example, all the steps mentioned, including that of the B3i consortium that remains to follow, seems to me uses of the blockchain to surf the wave of media buzz, but not always wisely.

Talk about it!

What do you think? Have I missed something essential?

Feel free to send me your comments or remarks. I am curious to improve my understanding on this subject!

If you want an opinion on your projects, contact me , we can meet and talk about!

Press review of January 30th 2018

revue de presse du 17 avril 2018

Here is a little overview of articles that caught my attention and deserve to appear in the press review of January 30th 2018!

Astonishing experimentation of CPAM

Links: The original article on The express , which raised lots of reactions, including this one in Le Monde .

The question of personal data and above all health data is really sensitive in France. Market players are also very focused on these issues in the context of the arrival of the GDPR regulation. However, this is the moment chosen by the Social Security to try an initiative really out of the ordinary. In an attempt to fight absenteeism, the Social Security has communicated to companies, whose absentee rate was 4 to 5 times higher than the average, the reasons for work stoppages, and first those related to MSDs ( Musculoskeletal disorders) and those of the PSR (Psycho-Social Risks).

The stated objective, in agreement with the trade unions, is to encourage the company to question the practices, and to consider prevention solutions upstream.

We are here in a very interesting process of exploitation of health data for the purpose of prevention! Crossing sources now allows this type of analysis, and it is interesting to note that neither the French CNIL nor the unions have opposed the approach, which shows the quality of the exercise!

Case to follow in a few months, with the first results of the test and an extension of the companies concerned.

Expanding Google’s artificial intelligence in Paris

Links: Articles of Jean-Christophe Gilbert , which relays articles Engadget and Bloomberg .

Following his visit to Paris on the road to Davos, Sundar Pichai, CEO of Google has announced its desire to strengthen, in Paris, his team dedicated to artificial intelligence. France is positioning itself as a real actor for the future on the subject.

More interesting, it turns out that Google’s offer tends to a SaaS offer, on the shelf, intended to be accessible to everyone, even without knowing how to code. This is the goal of Cloud AutoML vision (ML for machine learning).

Note: There is a free trial, I note in my todo to go try for you! If you have a specific use case (why not the pictures during claim’s FNOL), let’s do it together!

Emotional intelligence, or the complement to artificial intelligence

Link: http://www.propertycasualty360.com

A reminder of what is emotional intelligence and how it is now essential! In a context where artificial intelligence seems to take more and more space, it is interesting to follow a subject for which the role of the human seems to remain necessary!

The event to be

Novarica and the IOT insurance observatory offer a webinar on their research on February 28:

Registrations here!

Matteo Carbone – 4P’s of insurtechs

4P's of insurtechs

Matteo Carbone is an opinion leader in the insurtech industry today as one of the most prominent on the market. He created the Connected Insurance Observatory, an international working group, first in Europe, then in North America, dedicated to insurtechs. Matteo participates in numerous conferences around the world throughout the year. He unfolds his theory of 4P’s of insurtechs, and I wanted to make a presentation for a long time.

The 4P’s of insurtechs

First of all, you can listen to Matteo Carbone in his presentation at the 2017 Global Insurance Symposium in Des Moines.

You can also find slides at this link, if you are an aficionado of his prose, without listening to his wonderful English accent!

Key points to remember

According to Matteo Carbone, insurtechs can intervene on 4 axes:

  • Productivity : be more efficient
  • Profitability : get a better technical result
  • Proximity : to be closer to the customer and his needs
  • Sustainability of the portfolio (the term it uses is “Persistency” which means persistence over time, and therefore no attrition): Build a profitable portfolio on the long run term, with a small rotation.

In the absence of these objectives, there is no interest in innovating because the solution will not bring anything useful.

Telematics

The second subject addressed in this presentation is telematics, because it is one of the key topics of Matteo Carbone. The Swiss Re report which I was echoing a few months ago is directly worked with him, when it comes to the Italian example.

3 topics to consider:

  • The connected object : often a black box connected to the vehicle
  • Insurance coverage : and the notion of incentive reduction associated with it
  • Associated services : access to a set of additional services that can be provided for a fixed fee.

Under the arguments that telematics allows of itself and of course a selection of the best risks ( Note: it is questionable ) and a better controls of the compensations ( Note: that on the other hand, I share ), he comes to the conclusion that the financial result of the insurer is improved thanks to this technology.

4P's of insurtechs

It is also possible to rework the customer experience on all of its use of the vehicle and the different needs that might be relevant. Note: this aspect is absolutely essential, because it is from the use that one deduces the exploitation that one can make technologies.

4P's of insurtechs

Finally, the figures it presents show that attrition will be lower with telematics than without (11% instead of 14%).

In short, that positive points!

My conclusion

I share a lot of Matteo’s conclusions.

By reading, you will understand that the questions of use and business need interest me first. The 4P’s of insurtechs are a key to reading that is interesting to keep in the lead.

On the Telematics side, I am also convinced of the short / medium term prospects for the subject. I invite you to read again my note on it . Let’s discuss if you want to consider a deployment!

SwissRe – Global Insurance Review 2017

global insurance review 2017

Version Française ici.


SwissRe has just published its global insurance review 2017 and its 2018 forecasts. The document is available at this link (Global insurance review) .

Innovation is essential, but to identify new answers, I remain convinced that we need to understand the state of the current market. This type of report is therefore essential to refine the grid of reading of what is happening in the world around us! This is particularly right as they give valuable insights into innovative solutions!

The four main themes covered in this document are:

  • Continued cyclical economic recovery at the macroeconomic level, although risks of instability persist;
  • Obviously, a big subject on the natural disasters of the year! These are causing great difficulties for all the systemic insurers in the area and therefore even more so for reinsurers;
  • Life insurance re-insurers adapt to the new deal;
  • Stable emerging markets in non-life and strong growth in life.

Key Points from the 2017 Global Insurance Review

More globally, here are the 10 points that SwissRe puts forward:

  • The rise of protectionism in large markets: in the United States, but also Brexit or the situation in Catalonia. This phenomenon is however not uniform (for example Latin America is liberalizing)
  • Monetary policy : what about the gradual end of quantitative easing?
  • Cyber ​​risk : The market is growing rapidly, and the stakes are high, particularly in terms of the quantity and quality of data needed for risk monitoring and pricing. A particular focus is to read p15 of the doc on this subject. Indeed, an estimated growth of 30% per annum of this market over the next 5 years should not be underestimated.
  • Increasing auto claims : More and more miles traveled, more traffic and distracted driving are the first drivers. The key is always technical results.
  • Brexit and the UK insurance market: Depending on the UK exit format, premiums should be reduced by 8 to 20%. This is a considerable shock on the market.
  • Innovate to increase the scope of insurability, especially in the “commercial” segments: I come back to this point just after
  • Losses related to Natural disasters (hurricanes).
  • Protecting Floods : Tools now exist to assess flood risk, and collaboration with states is needed to ensure the best coverage of this risk.
  • IFRS17 : Investments will be needed around the data to ensure good data collection and analysis.
  • Insurtechs in China : I’ll come back to this point below.

Increase insurability

On the perimeter of the “commercial” contracts (on which I am working rather seriously lately), innovation brings new solutions.

Swiss Re cites, of course, parametric insurance solutions, coupled with a global vision of risk, that solve complexities of the process at the time of the claims. On the other hand, it does not bring any real additional value talking about premium reduction for example.

The most important point about these contracts is that it is now possible to insure elements previously impossible to cover. This offers interesting growth opportunities. For example: image loss, product recalls, weather protection, or financial risks of increasing energy prices. This is now possible thanks to better access to risk data and a better assessment of its consequences.

Insurance can therefore strengthen its position as a protector of corporate investments and offset the risks of earnings volatility.

global insurance review 2017 global insurance review 2017

Insurtechs in China

A small recap is proposed on the issue of insurtech in China, where the growth of Zhong An is particularly impressive (insurtech largest insurer of the world).

2 successive waves took place in China:

  • A first from 2001, around the online distribution, which brought the online market share to almost 8%;
  • The second in recent years, which exploits new technologies and especially big data (telematics or insurance to use / UBI)

Prospects can still open up to cover the ecosystem of e-commerce, and even consider the entry of new players outside the insurance world.

The Chinese regulator seeks to constrain certain segments (such as online lending), but it is generally rather a support for innovation.

global insurance review 2017 global insurance review 2017

My opinion on the global insurance review 2017

Always of very good quality, the Swiss Re reports are full of information and figures. One could blame them for their lack of pedagogy and the austere aspect of their reports, which prevent a diffusion to the greatest number. It may be the price of quality!