svia insurtech summit dec 5 - 6th 2017

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Blockchain & InsurTechWhat’s attainable in the next 18

months?December 2017

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#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

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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

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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

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

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

• 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

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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

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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

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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]

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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

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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

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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

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Verifiable Claims

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Issuer

Signs Claim

Holder

Countersign Claim

Wallet

Verifier

Verify Signature

Decentralized Identifiers

Blockchain Infrastructure

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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

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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

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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!

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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

• lawrence@lawreneilerner.com• Direct: +1.630.248.0663 (Seattle Based)• Twitter: RevInnovator• LinkedIn: https://www.linkedin.com/in/lawrencelerner/

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