blockchain applications in life insurance · blockchain is a technology that empowers trustless,...

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Blockchain Applications in Life Insurance

Magda Ramada

25 October 2019

Life2019

© 2019 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers

Watson and Willis Towers Watson client use only.

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Data enabled innovation and why it is relevant to

consumers

Why?

© 2019 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.


From…To…

And beyond…Now, just imagine…


Consumer journey in the retail space


From…To…

And beyond…Now, just imagine…

▪ DB to DC

▪ Death benefits

▪ Investment support

▪ Coverage of protection gaps

▪ Full indemnity to

PPO/HMO/EPO

▪ Talent: from Data to Consulting

▪ Behavioural finance

▪ Guided options

▪ Exchanges & marketplaces

▪ Digital advisory services

▪ Life and health coach

▪ Financial wellness coach

▪ Productivity/Work-life balance

coaching

▪ Talent solutions/Outsourcing

▪ Insure your life

▪ Pay-as-you-live

▪ Pay-per-life

▪ Risk mitigation services

▪ Higher frequency interaction

▪ Gamification

▪ Personalization

That any activity intermediating

risk or benefits assessment,

planning, placement and

management accesses DATA

that is:

▪ Hypergranular

▪ Permission-based

▪ Decentralized and/or

distributed

▪ High frequency and

multistate


Consumer journey and product evolution in the benefits, health,

risk and talent space

Tech enabled partnership for a longer, more productive and healthier life



Your 7’ Blockchain 101

What?


101: What is Blockchain?

It is a shared distributed ledger technology




Shared Consensus


Cryptographic Ledger


Digital and distributed


Centralized Decentralized

Distributed


Who does the work?

Different ways of building and maintaining

Consensus:

▪ Proof of Work

▪ Leader based systems

▪ Economy based systems

▪ Virtual voting



What information goes on the blockchain? A simple example:

… e.g. avoiding double insurance fraud


Entity 1

Systems

Entity 1

Distributed Ledger AKA blockchain

Entity 2

Systems

Entity 2

Entity n

Systems

Entity n

…

Passport Number: ABC123456

Vehicle ID Number: GE77842334FGU67FP98NG20VCXS1956B44

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…and why are they so fashionable today?

101: What are Smart Contracts…




Transacting value in a decentralized way

Why do we need clearinghouses, banks and other trusted third parties to oversee transactions of value?

▪ Safe and secure transfer: it has to get there

▪ Record transfer of value: people must have a way to verify that it happened

▪ Guarantee legitimacy of transfer: buyer and seller must have ownership of transacted asset and of funds

used to buy them

Blockchain is a technology that empowers trustless, digital peer-to-peer networks to do

exactly that, without the need for a third party.

What if we could transact Risk in the same way?




Where?

Let’s look at some use-cases


New enabler of what?


Event-triggered smart contracts

Increasedback-end efficiency

Disintermediation

Better predictive analytics and risk/behavior assessment

New products, reaching underserved

Increased transparency: identity & provenance

Synchronization

and Automation

New infrastructure,

for new Analytics

Autonomous value

and risk placement





Disintermediation




Synchronization

and Automation

New infrastructure,

for new Analytics

Autonomous value

and risk placement



▪ Automated & Unstoppable▪ Decentralized▪ Trustless



New enabler of what? Unstoppable automation among 3rd parties





?

$

Unstoppable automation among 3rd parties


▪ Synchronization instead of Reconciliation

▪ Less human error, no data duplication

▪ Less processing delays, less transaction costs



New enabler of what? Synchronization of ecosystems of value




New enabler of what? Synchronization of ecosystems of value

Automated

reaction to

changes in risk

Automated post

sale processes

Digitization and

automation of

policy terms

More pricing

sophistication

and better UWIncreased risk

transparency

Data sharing

▪ From reconciliation to synchronization▪ Single ledger of truth▪ Better pricing – more accuracy, real time response

– and improved UW due to access to sharing of data sets on risk information

▪ Structured data shared securely across network with coded regulatory and governance

Smart contracts

▪ Automation of policies▪ Automated processes among parties with

conflicts of interest▪ Automated responses to changes in risk in

almost real time: geolocation, smart container data




New enabler of what? Atomized marketplaces for risk





Disintermediation




Synchronization

and Automation

New infrastructure,

for new Analytics

Autonomous value

and risk placement




Increased transparency:


Provenance Ownership Identity





Ownership





Ownership

Policy ownership registries





Identity

Identity vaults

▪ Self-sovereign identities▪ Storing of health records and

medical data▪ Managing consent▪ Matching individuals to drug

trials▪ Portable identity wallets▪ Issuing and management of

digital credentials

Self-sovereign identities





Identity

Self-sovereign identities



Clin

ica

l d

ata

–M

ed

ica

l R

ec

ord

sHealth Apps

Wearables and

connected

devices

Implants

Mobile Coaches

Telemedicine

Home medical

devices

Patient generated data

Block 1

Date: 12th Jun 2017

Steps: 8564

Nikerun: 34 minutes

Block 2

Date: 25th Aug 2017

Blood pressure: 110/70

Block 3

Date: 31st Dec 2017

Arrhythmia

Stress, mild depression

Block 4

Date: 15th Feb 2018

Leucocytes low

Oxygen saturation low

Block 5

Date: 1st July 2019

Fitbit: swim 2 miles

Withings: 7 hours sleep

Vision: a holistic view of patients in digital identity vaults

Block 1

Age: 0.5

Tx: Vaccine A

Block 2

Age: 6

Dx: Flu A

Rx: Tamiflu

Block 3

Age: 10

Dx: Appendicitis

Rx: Antibiotic B

Tx: Appendectomy

Block 4

Age: 30

Dx: Pregnancy

Rx: Anticoagulants

Tx: Normal delivery

Block 5

Age: 65

Dx: XYZ Cancer

Rx: Chemotherapy

Tx: XYZ-ectomy

2

3

1

Rx





Identity

Self-sovereign medical identities



Self-sovereign medical identities



▪ Prediction markets ▪ Staking as pricing mechanism▪ Harnessing social capital

Better predictive analytics and behavior assessment

New enabler of what? New sources of data






Disintermediation




Synchronization

and Automation

New infrastructure,

for new Analytics

Autonomous value

and risk placement



DisintermediationNew products, new (underserved) markets




New enabler of what? Peer-to-peer insurance



New enabler of what? Distributed Risk Cooperatives



New enabler of what? Self-mutualizing longevity risk (?!)



New enabler of what? Self-mutualizing longevity risk (?!)

Tontines are not new

▪ By 1905 the AUM of tontine insurance in the US

was more than $6 billion, 7.5% of US wealth

▪ Managing tontines was a nightmare

▪ Membership management

▪ Death certificates

▪ Embezzlement scandals

▪ Incentives to outlive others can be good and

bad…

Tontines on the blockchain

▪ Anonymity: you do not know the other members

▪ Smart contracts track the alive or dead status of members

▪ Full transparency in asset management

▪ Low-fee annuity, can pay a higher yield due to its simple structure



What now?

The road ahead



Where does it make sense to apply blockchain?

Blockchain is not about efficiency or automation…

…it is about enabling a new governance paradigm.

It is not a technology, it is a soci(ologic)al innovation.



While the incumbents’ use of blockchain focuses on automation and synchronization…


…the Blockchain native vision is one of Distributed Autonomous

Insurance Data Self-Sovereignty and the tokenization of social capital, behavior and risk


Social Capital

Builds trustworthiness ratings in a

trustless system by using identity

solutions and harnessing social capital.

Leverage behavioural analytics. Selective

data disclosure, ZK proofs.

Prediction Markets

Combine prediction markets with

risk pooling and risk placement. Use

prediction markets to assess and

price risk. Generate data through

staking, where there is none.

Oracles, Provenance and

Data providers

Connects to IoT devices and trusted

data providers to feed Smart

Contract Automation. Uses identity

and provenance solutions.

Automation through Smart

Contracts

Builds DAOs compressing the risk to

capital value chain by handling claims

and investments & connecting data

sources with smart contracts and AI.

Requires Capital side solutions.

Blockchain

enabled P2P

risk transfer


Let’s recap: From closed to open data economies

The road to data decentralization is a layered stack


Future

of

Data

Decentralized

Data

Infrastructure

Data

Value

Data

Usage

Production and storage

of data▪ Data validation

▪ Data storage

▪ Data protection

Tokenization of data▪ Data value

▪ Data exchange

▪ Data marketplaces

DApps, Functional

layer ▪ Applications running on

the data (can be

centralized or

decentralized)

▪ Data sharing

▪ ZKProofs and data

certificates

▪ Big Decentralized Data

and ML/AI

Data as a

collateralizable asset▪ Unlocking social capital

▪ Prediction markets

▪ Monetizing data


What does this all mean for predictive analytics?




…but High-stakes technologies and new ways of

social interaction are here to stay.

The road ahead

The blockchain ecosystem is well capitalized, believes in new ways

of distributed social interaction, and is ready to build the plumbing to

enable their long term vision.

There are still many challenges associated with blockchain…

In the Benefits, Life & Health space data self-sovereign solutions will

have a much more significant impact that e.g. in the P&C space.

Where does decentralization make sense?© 2019 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

How far away is this future?



Questions


Thank you


@WTWrisk

Magdalena [email protected]

@blockchain.magda.ramada

@MagdaRamada

Magdalena Ramada Sarasola, PhD

blockchain applications in life insurance · blockchain is a technology that empowers trustless,...

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