Frequently considerations of distributed ledger's future social implications present freshly differentiated images of somehow superior methodologies that may be radically better to the present day
Yet the decentralized recording of centrally controlled operations could instead be a marked degradation to both the technology's potential and developmental promise
Without an equivalent preceding structural change, the introduction of decentralized technologies into established industries wishing to bolster rather than improve service offerings gives some cause for concern
In a factually based, well-known business school anecdote a case of one of the first life insurance claims is often repeated. Shortly after this type of policy became available a life insurance policy holder did indeed pass away during the applicability of his high-payout protection
When the family of the deceased attempted to claim, the insurer wrote a new definition of how their company calculated 'one year' so as to [successfully] avoid settlement
Spoken of as commendable industrial ingenuity or defenseless profiteering would most likely depend on whether it was relayed in a strategy or ethics lecture. However, with this tale in mind we now turn to the introduction of blockchain technologies within the insurance industries:
"ORLANDO, Florida — Blockchain technology has a future in workers compensation transactions as the technology has the potential to improve communication and efficiency industrywide, a presenter told attendees of the National Council for Compensation Insurance Inc.’s Annual Issues Symposium on Friday. Blockchain is a decentralized, peer-to-peer network that provides insurers and stakeholders a way of “producing, storing, managing and sharing data as a secure record of transactions,” said Paul Meeusen, head of distributed ledger technology and director of finance reinsurance at Swiss Re and CEO of B3i.
Blockchain consists of a distributed ledger, consensus providing a “single version” of information, cryptography for secure and authentic transactions, and smart contracts, which are auto-executed under predefined conditions, Mr. Meeusen said. In a traditional insurance system, there is an inefficient flow of information from policyholder to insurer to reinsurer to capital market, he said. Mr. Meeusen explained how the technology works to create efficiencies rather than collecting and examining data in separate systems.
"We are working together, but we keep control of our data,” he said.
For workers compensation, blockchain can allow stakeholders opportunities for sharing personal and medical information, providing a secure place to store and access data. The technology would also allow for verification of comp coverage across the blockchain platform, he said. Blockchain also allows for real-time messaging and confidential sharing of information across the industry, he added. “There is definitely an efficiency component here,” said Mr. Meeusen | May 19th 2018, Louise Esola on Business Insurance”
The blockchain may indeed offer transparent, decentralized and immutable recording of digital data entries. Possible extensions utilizing automatically executable or complexly triggered 'smart contract' events are also numerous. This is without question
The quality of the content though is perhaps something often either overlooked or simply subsumed into the excitement of the technology
Using new means to replicate existing methodologies may be to forgo opportunities of improvement
In other words, regardless of an insurance policy being held centrally by the issuing company or recorded via decentralized technologies, this says nothing about its practical implementation. The same issuing company formulated and enforces the terms
The caveats, clauses, loopholes and conditions of many insurance policies that prohibit payouts to holders are too numerous to list here in detail. It is sufficient to say that for many they form a recognizably accepted portion of the insurance process
To now immutably digitize the insurance company's terms and conditions with complexities that may not wholly be understood by the individual holders of such policies confers only benefits to the issuing company
As rather than a personable exchange, clarification or justification in any lack of comprehension here the holder's digitally immutable and time-stamped agreement with such a document is forever locked
While the transparency of the documents themselves may be set, the comprehension and honoring of the policy can remain largely one sided. The use of immutable records is only beneficial provided sufficient knowledge of the meaning or implications of these records exists. A convoluted and one sided policy remains just that, whether on or off the blockchain
The very presence and survival of the hugely profitable insurance giants should hint at the business structure. Ultimately, like a casino, the company's calculations and metrics are superior to our understanding of probability
Like a round at the blackjack table a player's chance at profit or their enjoyment in the risk of participation itself outweighs what is essentially a guaranteed loss when measured on a sufficient time scale. The house always wins
This is why there is the [well decorated and ornately furnished] house itself. Aside from investment strategies as well as a multiplicity of financial activities, at its core insurance coverage exists as the house is betting that we, the policy holders, are wrong
For any business it is unsustainable to payout more than you receive. Therefore the range in choice of insurance has and continues to be available as the purchasing of these, over a long enough time scale, earns the issuing company more than it costs for them when paying out
This is not to marginalize a host of potential benefits, protections and security provided by insurance offerings. As with automobile accidents for example, in a cost benefit analysis one's deference to experienced centralized behemoths for resolution may simply be prudent and well worth such costs particularly in consideration of the alternative's possible time requirements. It is simply to state that throughout all insurance offerings, the house [an insurance company] exists because it remains profitable