The impact of blockchain technology on insurance business models: Stress testing the insurers' business models using the STOF Model

As the insurance industry engages in numerous processes which are characterized by the exchange of data which is updated by multiple parties; a blockchain, as a single source of truth, has the potential to increase efficiency and reduce the complexity of these processes. However, the complexity, uncertainty, transforming potential and barriers to adoption associated with blockchain technology make it hard to assess its impact on insurers. Therefore, this research aims to help insurance industry business decision makers to anticipate the impact of blockchain technology on their business models, by finding the most important parts of the business model that need to be addressed. It does so by means of expert interviews and a business model stress test workshop. In this workshop, experts assess the impact of uncertain future developments on an insurance reference business model which is described using the STOF business model ontology.It has been found that currently, enterprise-grade blockchain solutions that meet the requirements of the insurance industry regarding governance, privacy, scalability, identity and access management, security and reliability are not available. Besides no concrete insurance use cases that will actually realize benefits have been found. Therefore, it is hard to justify investments that are specifically targeted at blockchain technology. However, there are two investments insurers should make that are not specifically targeted at blockchain technology, but will prepare insurers for technological innovation, whether blockchain will reach maturity in the near future or not. The first and most important investment is related to standardization. The workshops led to the insight that the most crucial uncertainty outcome is the strength of cooperation. The standardization of data formats and field descriptions is a prerequisite for this cooperation. Insurers just started this standardization in order to facilitate data exchange with other insurers. Insurers should continue their standardization efforts, as it will facilitate data exchange in the insurance value chain and being compliant with GDPR, regardless whether blockchain will be implemented. The second investment is related to rationalization, it will enable insurers to respond more quickly to changes in IT and be compliant with regulation. Blockchain can be a driver for thinking about how systems can be developed to support decentralization, a division of roles and agility, however, the rationalization process should not be targeted to a specific blockchain platform, as it is hard to choose from the scattered field of blockchain platforms.Management of Technology (MoT