One of the “Big Three” credit rating agencies thinks blockchain is a “game-changing technology.”
Fitch Ratings touted the potential uses for blockchain within the insurance industry in a report published Wednesday, saying “insurance is fertile ground for blockchain’s capabilities.”
In particular, the company sees blockchain as a tool for streamlining the transactions companies conduct while simultaneously reducing instances of fraud, according to a press release posted alongside the report, which wasn’t publicly available as of press time.
Those benefits are likely to be felt in the long-term – sometime in the next three to five years – whereas the short-term implications are likely to be minimal. As well, the tech is unlikely to impact the credit ratings of affected firms before that time, according to Fitch.
As Fitch explained:
“Efficiencies and cost reductions could be achieved by reducing the need for reconciliation and audits, automating certain processes and improving access to data. Estimates of the potential savings for the global (re)insurance industry from Pricewaterhouse Coopers and B3i, an insurance industry trade group focusing on blockchain, range from 15 percent to 30 percent of annual current expenses.”
That being said, the company also noted that “the uncertainties around this nascent technology remain pronounced.” In particular, it is unclear how widely blockchain technology will be adopted, and whether the pay-offs of using a platform built around the tech will outweigh the initial investment.
“There are numerous legal, regulatory and security issues that need to be addressed to facilitate wide-scale adoption,” Fitch wrote, adding that: “…the ultimate viability of the technology for the insurance industry will depend on a select group of industry leaders adopting blockchain to gain competitive advantages.”
Insurance icons on wooden blocks image via Shutterstock