SVIA InsurTech Summit Dec 5 - 6th 2017

Confidential Information

Blockchain & InsurTechWhat’s attainable in the next 18

months?December 2017


#FollowTheMoney

• Token sales of blockchain are north of $2,000,000 this year

• CME (12/18) and CBOE (12/10) begin trading Bitcoin futures • $500M in VC money in 2016• Bitcoin hit $4,000 $7,300 $10,000 $12,000• 18,000 cryptotokens launched

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And there aren’t five enterprise launches in the room


What is a blockchain?

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Recorded events (ledger entries) recorded chronologically and verified by multiple third parties. May be public or private


What’s in a Blockchain Ledger?

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1. Eye Exam 5/12/2017 Patient 8931

2. Visit on 5/12/20173. Need new glasses4. New prescription

Patient 89315. Prescription 99881

filled6. Follow-up appt

scheduled 6/12/20177. Annual Checkup

5/12/2018






5/12/2018






5/12/2018

• Rows of information, just like a database

• Validation and verification is based on mistrust

• Public audit trails, (we’ll talk about private ones later)

• Record keeping by many third parties often unknown


Why will Blockchains get Adopted?

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• 400,00 transactions per day• Median transaction fee of $3.25• Average time for median block size is up to 45 minutes

$450

• 600,00 transactions per day• There are a total of 18,140 ERC-20 Token Contracts• See the token values at https://etherscan.io/tokens


Why will Blockchains get Adopted?

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Platforms = Wealth: Amazon Web Services

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• Detached from Retail business in 2006

• AWS Q1 2016– $604 MM

• AWS Q1 2017– $890 MM

• Operating Margin – 24%+

https://www.recode.net/2017/4/27/15451726/amazon-q1-2017-earnings-profits-net-income-cash-flow-chart


and verified by multiple, independent third parties

Blockchains are…

Recorded events or transactions (called ledger entries) recorded chronologically, mathematically signed

Blockchainin3D• Decentralization• Disintermediation• Distributed[Ledger]


What makes a good blockchain use case? 1. Multiple parties share data

– Multiple participants need views of common information

2. Multiple parties update data

– Multiple participants take actions that need to be recorded and change the data

3. Verify Trust

– Every participant requires validation of the transactions and integrity of data written

4. Decentralized

– No single repository or owner of the repository locations

5. Distributed Ledger

– Data is written across multiple ledger entries

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Is This a Hammer In Search of a Nail?• Inter-Company Transfers (manual hand-offs)

– Insurance– Property and title transfers– Anything with government as a third party

• Verifiable Record Management– Formally physical assets now digital (stocks, currency, prescriptions, vehicles)

• Identity Management– Identity and “certificates of trust” for mobile economy companies such as

AirBnB and Uber– Reputation

• Smart Contracts– It’s the new Software as a Service

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What’s the Foundation For Insurance?

• Identity– People– Assets– Property

• Beyond digital signatures– Document aggregation and partner validation

• InsurTech– Streamlining workflow, IoT and incident monitoring

• Redundancy – Store data/record without fear of loss

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Namespaces

• A namespace is simply a boundary not unlike the borders of a country or the address – (Washington Monument, CenturyLink Field).

• Namespace architectures are addresses– The are used to bound the scope of a set of activities

or actions

– Some blockchains (Ethereum, RChain) allows us to compose name spaces. That is, they may or may not be shared

• This allows us to search through or for an exact node allowing transactions via smart contracts to both process faster and more precisely.

• Namespaces can be both public and private.

– Private Namespaces are valuable for transactions between two parties (e.g., funds transfer) or complex ones between select partners such as supply chain.

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Sharding

• A long standing technique for subdividing tasks or server load. – Originally used in databases, shards are

horizontal slices of a data store spread across multiple services to take advantage of processing capabilities of many lower powered devices

• A series of chains created• The net-effect is speed. It’s not

necessary or required to write to every block

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Smart Contracts and Oracles

• Used loosely as ‘contract’, a smart contract is a process with– Persistent state– Associated code– Deterministic which is why you need…

• Oracles are connections to the outside world– They are designed to ”edge trigger”

smart contracts. – When one or more conditions are true

they cause a smart contract to run

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Oracles

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HardwareSoftware Consensus Based

• Oracalize – www.oracalize.it• Chainlink - link.smartcontract.com

duplicate :: [a] -> [a]duplicate [] = []duplicate (x:xs) = [x, x] ++ duplicate xs

main = print $duplicate "abc"

Inbound and Outbound


Private vs. Public Blockchains

• Public Blockchain– Many third parties validate ledger entries– No single “owner”– Harder for the black hats to take over– Policy changes are by consensus unlike companies (e.g., Facebook)

• Private blockchains– Faster to close or clear transactions– Single owner – Bad scenarios for trust– Good for small autonomous networks

• Internet of Things

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Simple Workflow

• Handoffs where there are manual processes

• Small claims – Too expensive to test?

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Claim Submitted

Adjuster Report

Small Claim

Work with 3rd Parties

Size >$1,000

Fraud Check

<$1,000

No Yes

Large Claim

Collect Documents

Pay Claim

End

Send Rejection Letter


Decentralized Identifiers (DID)• Conventional identity management is

based on centralized authorities– Directory servers– Certificate Servers– Domain name registries

• DID*– Lifetime portable identity not dependent on

any centralized authority and can never be taken away• Person• Organization• Asset

– By transaction

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*https://w3c-ccg.github.io/did-spec/

My Wallet

did: h275cq14f2aua8a7ljtykbktj5did: vyma705f2azif5trsnj8did8rmdid: 5j8htbh0rrlb1t5ubf6i3kg3ls did: wftgnlbw45chgtha95zqa69sbf did: qhq3k0r1p0jz46tggvcyf98hxk did: f0e63zuhsbtfunw8hh333f5shc did: 1lot6cgg2hqgxczwq9ulqrhece did: z61swni6pshhqhjrvwvrnc6rvp did: nih1lhusnzafjw1ftfemi530db did: x17lkee0ekimcubutadi4soqnz did: 3w1co77529qcg4xesrrl1r7fds


Verifiable Claims

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Issuer

Signs Claim

Holder

Countersign Claim

Wallet

Verifier

Verify Signature

Decentralized Identifiers

Blockchain Infrastructure


Zero Knowledge Proof Identity

• Completeness: – If the assertion is true, the verifier is convinced of the truth

of the statement

• Soundness: – If the statement is false, no bad prover can convince the

honest verifier that it is true, except with some small probability.

• Zero-knowledge: – If the statement is true, no verifier learns anything more

than that

– Example:

• “I keep a speckled colored dragon”

• “I am over 21”

• “This is the password to my bank account”

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Proving you have knowledge of something without having to share the source of data.

Trust

Verifier

Prover

did: x17lkee0ekimcubutadi4soqnz

duplicate :: [a] -> [a]duplicate [] = []duplicate (x:xs) = [x, x] ++ duplicate xs

main = print $duplicate "abc"

Smart Contract

Yes/No

a8a7ljtykbktj5trsnj8did8rm5ubf6i3kg3ls chgtha95zqa6

EncryptedAsset


Where are the Immediate Opportunities?• Onboarding– Costs– Opportunities – Churn in the industry

• Fraud Detection – Estimates show that 5 – 10% of non-healthcare claims are fraudulent.

Identity resolves tracking the information• Document Packages– Requires the least amount of group participation– Signing and sharing is well established

• Peer-to-Peer Insurance– Incentivizing payments

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#FollowTheMoney


Barriers/Opportunities

• Regulators want to address single entities and not networks• Too many use cases where everyone must participate• Hot potato of risk– Last one holding it, gets stuck with the check

• PII– Right to be forgotten– Where is the data shared/stored– Keep the data only for as long as necessary

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Thank You!


Lawrence I Lerner• Bridging the gap between the Business and Technology– 25 years executive leadership (PricewaterhouseCoopers, Cognizant)– Every day technology product launched Motorola, Discover Card, The

New York Times, Safeway Stores, in-store coupons– Four years of blockchain related work– 15 startup companies – leadership and funding– Public and Private board roles

• [email protected]• Direct: +1.630.248.0663 (Seattle Based)• Twitter: RevInnovator• LinkedIn: https://www.linkedin.com/in/lawrencelerner/

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SVIA InsurTech Summit Dec 5 - 6th 2017

Business

Transcript of SVIA InsurTech Summit Dec 5 - 6th 2017