Insurance carriers have been collecting data for decades. The American Association of Insurance Services, or AAIS, serves as a bridge between carriers and regulators for regulatory reporting. We anonymize and aggregate a specific subset of a carriers’ data and share it with regulators.
For the past 80 years, this process has required the transfer of large data files, either paper or digital. During this time, concerns have emerged around security, access, accuracy and timeliness, among others. We knew it was time for a change. Change that would benefit us, as well as the broader insurance industry community.
IBM Garage workshop identifies broken processes
Given IBM’s in-depth knowledge of the insurance market, we decided to engage with the IBM Garage through design thinking workshops, inviting carriers and regulators to participate.
Through those workshops, we learned that the transfer of large data files was a source of consternation for all carriers. It’s not that they didn’t want to share the data; they felt that the mechanisms for sharing it were broken.
We also discovered that the 80-plus year-old statistical reporting process that transfers a known set of data to regulators was not meeting their needs. A completely separate process had sprung up over the years in which the regulators were going directly to the carriers with a need for more specific, timely data, for example, after a hurricane or wildfire.
The solution: An open blockchain network
After working with the IBM Garage, it became clear that the IBM Blockchain Platform using The Linux Foundation’s Hyperledger Fabric could help resolve our data-sharing issues in a way that could benefit both carriers and regulators in the blockchain network.
We were able to quickly build the openIDL (open Insurance Data Link) blockchain network on the IBM Cloud. openIDL is an open blockchain that facilitates the efficient, secure, and permissioned-based collection and sharing of statistical data within the insurance ecosystem.
The data is stored privately, and the blockchain technology provides an immutable record, or a fingerprint, of the data from each carrier. Access to the data is permissioned across the blockchain network without having to give away data control. For example, when a regulatory body needs data on a recent hurricane, it can ask permission to access the relevant data and verify its authenticity based on the fingerprint stored on the openIDL blockchain network.
An evolving regulatory reporting network
Blockchain technology is a team sport. Many organizations have to come together and participate for the blockchain network to add value. We continue to host design thinking sessions with network participants every quarter, based on training we received from IBM.
The permissioned blockchain network gives us the opportunity to include new members that can add value to the carriers and the regulators, expanding regulatory reporting so that it is not limited to carriers supplying data and regulators consuming it. We’re looking at including new participants with new sources of data such as weather companies or Internet of Things companies. In the future, perhaps the openIDL network might even include data modeling companies that could add insight to the data the regulators need.
Watch Joan Zerkovich discuss how blockchain technology helps ease the burden of regulatory reporting and information sharing within the insurance industry.
From time to time, we invite industry thought leaders, academic experts and partners, to share their opinions and insights on current trends in blockchain to the Blockchain Pulse blog. While the opinions in these blog posts are their own, and do not necessarily reflect the views of IBM, this blog strives to welcome all points of view to the conversation.