'Don’t know': blockchain poorly understood in insurance

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More than a fifth of 352 global executives surveyed by GlobalData said blockchain was “all hype and no substance” and rated it less use to the insurance industry than augmented reality, internet of things, 5G, cloud computing, cybersecurity and artificial intelligence technologies.

GlobalData’s Emerging Technology Trends survey found 21% responded “don’t know” when asked if blockchain had potential, signalling “a significant level of misunderstanding regarding the technology”.

The survey comes after the recent collapse of Blockchain Insurance Industry Initiative (B3i), which “leaves a question mark hanging over the technology’s role in the industry,” the report said.

Analyst Benjamin Hatton says blockchain has often been poorly defined and misunderstood, and its association with cryptocurrencies and digital assets has left it with a poor reputation among many.

“As regulation is gradually introduced and strengthened, some firms may get the confidence in the technology they need to reconsider the power of blockchain,” he said.

“While blockchain and distributed ledger technology is certainly complex, uses have emerged in the insurance industry, notably in parametric insurance for natural disasters and catastrophes.”

A third of those surveyed indicated their sentiment towards blockchain was more negative than a year ago, the highest of all technologies in question. Mr Hatton says negative sentiment “appears to be creeping back in,” likely driven by the collapse of cryptocurrency values this year.

“Although this may set back the development and implementation of blockchain in insurance, use cases will remain and continue emerging in the future,” he said.

The survey found the percentage of executives saying “it’s all hype and no substance” was 21% for blockchain, compared with 16% for augmented reality, 12% for internet of things, 11% for 5G, 7% for cloud computing and cyber security, and just 6% for artificial intelligence.

The percentage of executives who said each technology will live up to all its promises came in as follows: blockchain 22%, augmented reality 24%, Internet of things 35%, 5G 48%, cloud computing and cybersecurity 55%, and artificial intelligence 53%.