This is an opinion piece by Bob Crozier from Allianz Technology SE, where he is Chief Architect, Head of Enterprise Architecture and Head of Global Blockchain.
This year 2021 was a turning point for corporate blockchain in the insurance industry. Large-scale products have entered full production, generating millions of euros of value, either in cost savings or new revenue, for primary insurers.
As we turn the page this year and look to 2022, I see several similarities to 2018, where cryptocurrencies were coming out of the back of All Time Highs. We are in the midst of the peak of the NFT hype and the interest of colleagues who are not closely related to the DLT space is once again evident.
As in 2018, 2022 will be the year serious gamers lean in and build. They will walk away and quietly discover the business value of digital assets and undertake the process to bring them to life in real and meaningful ways.
Where was the world of insurance in 2018, the profession of asset management is today. They will commit resources to fully understand the technology and regulatory frameworks evolve to encourage adoption and value exploration. I think the production cycle will be shorter with the insurance products already deployed, giving the assurance that “the technology works”.
It’s great that the technology teams at financial services companies have figured this out. However, the real change comes when business leaders are convinced of the power of technology in how it can solve their real problems and can see these patterns replicate in their businesses.
By multiplying the advances described above, the exploration of the central bank’s digital currency (CBDC) will continue at the rate of certain projects and cross-border initiatives already providing initial information and real measurable results. When CBDCs are combined with digital assets enabling Fiat ledger settlement, the space will start to really heat up.
This work will begin in earnest in 2022, laying the groundwork for a large-scale value exchange. Indeed, it has already started in China and we will see the DC / EP digital yuan win at the Winter Olympics where, with travel restrictions permitting, foreign nationals will be able to taste digital currency for the first time.
What does the insurance have in store
In the area of insurance, we will continue to develop and expand the current product line that connects businesses. From cross-border claims settlement, for example, we will move to more general settlement of payments, invoices and risk transfers, building on the real value already presented by current products. We will see the first large-scale legally binding contracts signed ‘on the ledger’ still compliant with compliance and other regulations and begin to set in motion the transformational evolution of the insurance risk transfer business.
As unlicensed public channels evolve into more environmentally friendly models, the financial services industry will continue to experiment in this space, although I would expect the big players to only get serious when the proof is on. participation will be fully implemented.
What is the insurable value of a magic cloak or sword that has been earned through the effort and money of a metaverse player? What risks are likely to arise from such a digital asset? How much does it cost to replace? I would expect more big players (in addition to Nike & Adidas) to seriously examine the value proposition of NFTs and other digital assets that are proven to be unique. It is only by being able to price the risk of these assets that insurers will be able to provide products that allow reasonable settlement of claims.
In short, 2022 will be a year when more products become true value generators and another exciting year for exploration. The blockchain ecosystem continues to grow exponentially!