Blockchain,

a catalyst for new

approaches in insurance

Part 2
Market launches and changes
in 2019
01. Matching the right platforms with the right applications 2

02 .Traceability and KYC 8

03. Smart contracts and automation 12

04. ICOs and token economy 16

Legal and regulatory point of view 20

Conclusion 22
 

“Blockchain, a catalyst for new approaches in In PwC’s third annual Global Blockchain Survey (3),
insurance – Part 1" published in 2017(1), presented published in 2018, of 600 executives from 15
our perspective on technological developments and countries and territories, 84% report blockchain
their impact on the insurance value chain in initiatives being underway. As blockchain rewires
particular. We gave several practical examples of business and commerce, the research provides one
what blockchain technology can offer, namely of the clearest signals yet of organisations’ fear of
traceability (for example, the provenance and being left behind as blockchain developments
condition of the insured items, confirmation of the accelerate globally, opening up opportunities
occurrence of events triggering claims etc.) and including reduced cost, greater speed and more
Know Your Customer (KYC) solutions, smart transparency and traceability. A quarter of
contracts and automation, index-based insurance, executives report a blockchain implementation pilot
interconnectivity with the Internet of Things (IoT), in progress (10%) or fully live (15%). Almost a third
and peer-to-peer insurance (P2P). Our conviction at (32%) have projects in development, and a fifth
the time was that “the idea of a decentralised, (20%) are in research mode.
secure and transparent ledger distributed among
users can/will help to manage increasing global The survey reflects the early dominance of financial
complexity and give power back to individuals. The services developments in blockchain, with 46%
insurance industry, with its highly complex identifying it as the leading sector currently and
processes, is expected to be a major beneficiary of 41% foreseeing its preeminence over the near term
the technology”. (3-5 years).

At the time of publication, blockchain technology In this report, we analyse market launches carried
was already attracting the attention of C-level out over the 2017-2018 period (first half), offering
executives in every industry. Although the financial different perspectives that highlight:
services industry seemed to be blockchain’s natural
target, the technology’s proponents began - t he first business use cases covered – relating
examining its potential applications in other primarily to traceability/KYC and the automation
industries, such as energy, food and the media. The of smart contracts;
challenge was to identify the relevant scenarios -h
 ow these solutions were implemented by major
where blockchain could have a significant impact. A market players or newcomers – technologies,
majority of incumbents were already monitoring project organisation, governance and interaction
technological developments, while a few were with the blockchain ecosystem;
investing in proofs of concept (PoCs). Taking into
account the limits of technology, the issue of - t he initial takeaways, as well as the upcoming
scalability, system integration, current processes challenges foreseen by market players, and
and the need to change the legal framework, our approaches to reduce risks related to deploying
teams expected blockchain technology to be widely blockchain technology, including operational,
adopted within five years. legal, regulatory, cybersecurity and reputational
risks.
One year later, the situation has changed
considerably, as interest grows, a community takes Aside from market launches, 2018 has undeniably
shape and the technology evolves. Businesses are been shaped by the emerging phenomenon of initial
increasingly moving from PoC to market launch, coin offerings (ICOs), which raised around USD 4
often through minimal viable products (MVPs). billion in capital in 2017 and USD 16 billion in the
first half of 2018 alone(4).
In June 2018, an article from Forbes asserted that
the ten largest companies in the world have a ICOs allow users to raise capital via blockchain
blockchain R&D department(2). David Marcus, technology to finance an innovative project, as
former Vice President of Facebook. Messenger and investors receive a token entitling them to voting
President of Paypal, announced that he would be rights, a licence or the right to participate in the
spearheading a small team in charge of identifying project. The question is whether ICOs should be
relevant blockchain applications for Facebook. viewed solely as a way of securing funding and
partners to launch insurance products on the
market using blockchain technology or whether
they should be seen as a new transactional product
that itself requires specific insurance cover.

Pauline Adam-Kalfon Corentin Richard

Partner PwC Advidory France Associate PwC Advisory France

(1) https://www.pwc.com/gx/en/insurance/assets/blockchain-a-catalyst.pdf
(2) https://www.forbes.com/sites/michaeldelcastillo/2018/06/06/the-10-largest-companies-exploring-blockchain/#2cbf13161343
(3) https://www.pwc.com/gx/en/issues/blockchain/blockchain-in-business.html
(4) https://www.coinschedule.com/stats.html?year=2018
 Matching the right
platforms with the right
applications

01 Bitcoin, the first blockchain

The history-making blockchain

search for a value exchange system
free of any supervisory body.

technology, Bitcoin, has been Bitcoin is the first decentralised,

attracting unprecedented media and virtual cryptocurrency; instead of
investor attention. Bitcoin was trading being created by commercial banks,
at USD 950 on 1 January 2017, at bitcoins are created by users of the
almost USD 20,000 in December 2017 network, who run a public algorithm.
and at USD 6,400 on 1 July 2018. There is a limit to the total number of
tokens that will ultimately be
The Bitcoin project was first released. Capped at 21 million,
introduced in the white paper “A bitcoins will be put into circulation at
Peer-to-Peer Electronic Cash System” a decreasing pace. Any computer can
on 31 October 2008, just a few weeks freely access the network and be
after the fall of Lehman Brothers and involved in the process of approving
the rejection of the Paulson plan by new transactions. The Bitcoin
the US House of Representatives, community updates the ledger
events that marked the beginning of a securely and transparently.
global financial crisis. The product of
several decades of cryptography
research, Bitcoin culminated the

Bitcoin, however, is just the tip of the iceberg...

Breakdown of cryptocurrencies – 1/01/2018

100,0%
90,0%
80,0%
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%

2 | Blockchain in insurance – Market launches and changes in 2019

 Matching the right platforms with the right applications

Breakdown of cryptocurrencies – 7/01/2018

60,0%

50,0%

40,0%

30,0%

20,0%

10,0%

0,0%

Ethereum, from smart contracts to DApps Smart contracts correspond to the first level of
decentralised applications:
The Ethereum project was launched in 2015 with
the aim of becoming “the world computer”. Like • if several smart contracts interact with one
Bitcoin, Ethereum is a public blockchain. Unlike another, they are referred to as an open network
Bitcoin, which was specifically designed as a enterprise;
currency exchange platform, its goal is to become
the first decentralised data exchange platform • if they interact with an autonomous agent
(decentralised internet) hosting the largest number (programs that make decisions without human
of blockchain apps. In the long term, the Ethereum input), they are referred to as a distributed
Foundation seeks to become a Web 3.0 or a "dApp autonomous enterprise.
store" as the first blockchain as-a-service provider
for the general public, using a cloud-based Ethereum makes its secured blockchain available
infrastructure. In practical terms, Ethereum wants using a public consensus protocol and enables the
to give everyone the opportunity to build complex, deployment of smart contracts managing other
fully autonomous applications. digital assets, i.e., tokens.

Ethereum’s blockchain uses its own programming The Ethereum project has evolved at a remarkable
language, Solidity. Ethereum is also unique for pace. According to an article published in June 2017
having introduced the idea of smart contracts, by CNBC, 500 startups and some 35,000 developers
which are programs that run automatically based are actively working on the Ethereum blockchain
on the conditions built into the code, and the (some believe this number to be much higher)(5).
information they contain cannot be modified.
The Ethereum Foundation is well equipped to lead
this ecosystem of researchers and developers, who
are contributing to what some consider to be one of
the boldest ideas of our time.

(5) https://www.cnbc.com/2017/06/23/ethereum-has-massive-potential-blockchain-expert-william-mougayar.html

PwC | 3
Several promising projects are being undertaken: Consortium blockchains, a new avenue for
business applications
• Slock.it, founded by Stephan Tual in 2015, is
trying to build the future infrastructure of the Another type of decentralised platform is a
sharing economy by enabling anyone to rent, sell consortium or permissioned blockchain, designed
or share anything – with no intermediary but with for business applications. Network nodes allowed to
insurance that can be activated/deactivated by participate in the consensus are chosen in advance
means of a smart contract. Today, Slock.it helps and read rights may vary from user to user. This is
1,070 owners of electric vehicle charging stations the case for Hyperledger Fabric, R3 Corda and
in Germany to sell their output on a peer-to-peer Quorum. Hyperledger, for example, has introduced
basis via an app; the notion of business network. B3i recently decided
to adopt the same type of technology.
• Augur, a protocol that allows each user to bet on
the outcome of an event and be rewarded if their These solutions are well suited to internal or B2B
prediction is correct. Augur aims to forecast the applications and allow for small-scale pilot
future based on collective intelligence, serving as schemes. The B3i initiative, whose goal is to pool
a sort of insurance/hedging solution. the data of major insurers, built its MVP on
Hyperledger Fabric and decided in June 2018 to
The second generation of blockchain – brought switch to Corda, notably due to interoperability
about by the Ethereum platform – promises greater issues. However, one of the drawbacks of the
flexibility and widens the range of possibilities for consensus model is that as a private network, there
businesses and end-users. The members of the is no economic incentive to maintain it. Another
network can interact with the blockchain via smart disadvantage of this kind of platform is that a token
contracts, which automatically initiate transactions. economy cannot be built on it.
The platform also democratises the token creation
process; it is actually possible to issue your own
virtual currency (tokens) on Ethereum, taking
advantage of its underlying architecture. Within
virtual currencies (cryptocurrencies), there is a
distinction between coins (bitcoin, ether) issued by
the consensus protocol of a public blockchain (one
coin per blockchain) and tokens, which are
exchanged via an existing blockchain. As of 1 July
2018, among the top 100 highest valued
cryptocurrencies, 44 were Ethereum tokens.
Speaking of tokens alone, a full 96 out of the top
100 are built on Ethereum!

These public blockchains boast transparency and

security, but are struggling to scale up, as the
verification of blocks by all members of the network
slows down the pace of transactions. Solutions to
address the issue are currently under development,
including Lightning, SegWit, Plasma, Sharding and
Casper.

4 | Blockchain in insurance – Market launches and changes in 2019

 Matching the right platforms with the right applications

PUBLIC BLOCKCHAIN CONSORTIUM BLOCKCHAIN

Blocks are validated one after another and Blocks are validated one after another and
cannot be modified cannot be modified

Network nodes Network nodes

Network nodes allowed to participate in the

consensus

The network is open to any new participants New nodes are accepted based on a consensus

All participants can be involved in validating Blocks are validated according to predefined
the blocks rules (approval from a specific number of nodes)

All participants can read the data contained in Read rights can be public or limited to certain
the blocks nodes

PwC | 5
Public blockchain / consortium comparaison

Advantages Disadvantages

• Take advantage of the vast number of • Transaction data are not private
developments contributed by the • Number of transactions per second is
community on various projects, shared quite limited
Ethereum
across all Ethereum projects
(Open Source) • Proof-of-work algorithm, high energy
• Many developers are able to program consumption
smart contracts on Ethereum

• High scalability • Project could become very dependent

• IBM offers support for tool on IBM
Hyperledger implementation and maintenance • Tool complexity reduces its accessibility
(IBM software solution)
• IBM is involved in many blockchain • Does not integrate cryptocurrency; not
projects optimised for managing tokens

• R3 offers support for tool implementation • Its architecture is difficult to implement

and maintenance • Data are not shared between nodes that
• R3’s teams manage numerous projects participated in the transaction; data
Corda with major banking industry players partitioning
(R3 software solution)
• Corda was thought as a distributed
solution that ensures data control, but
requires a strong governance to be set up

Bitcoin has successfully established itself as the no. for its solutions and is attracting increasingly more
1 digital currency, whereas Ethereum has set its talent. Consortium platforms, on the other hand,
sights on the riskier goal of asserting its position as are free of scalability issues and offer businesses a
a value exchange platform. The project still has a more agile, although less extensive, alternative.
long way to go, but has found business applications

6 | Blockchain in insurance – Market launches and changes in 2019

Matching the right platforms with the right applications

PwC | 7
 Traceability and KYC

02 Bitcoin is certainly the most

explored use case, and with good
reason, as blockchain was
product complies with the principles
of Carrefour’s charter.

invented to serve the purposes of Data pooling from the perspective

Bitcoin. Bitcoin’s creation of market-leading insurers
effectively solved the “double
spend” problem. In the normal course of business,
insurers have to securely gather
Double spending is simply the risk supporting documentation before
that arises due to the fact that the only they can determine claim payouts.
way to transfer data peer-to-peer via Data pooling projects are therefore
the internet is to duplicate the data taking shape in the industry to
(typically, when a user sends a address this particular issue.
document via email, rather than
physically transferring it, he/she is Major industry players are reflecting
sending a copy of the original). With on how to share their contract data in
blockchain, however, each token is order to pool processes through a
unique and the ledger – the shared, encrypted database. While a
blockchain – is immutable. This is claim today requires the exchange of
how Bitcoin became the first non- data, and therefore manual
replicable digital asset, enabling peer reconciliation and follow-up work, the
to-peer exchange of value without a blockchain platform allows all the
middleman. information needed to settle a claim
to be stored in a single access point.
Blockchain serves Bitcoin by securely
bringing data under one roof, offering The B3i initiative, launched in
a built-in audit trail for transactions of October 2016 by five major European
all kinds. The ledger eliminates the insurers and reinsurers, has
need for endless paper-based record developed a distributed smart
keeping and email exchanges. contract management system for
Property Cat XoL contracts, which
Moreover, blockchain is relevant to all was presented at the 2017 Rendez-
industries, including finance, luxury Vous de Septembre in Monte Carlo.
and retail. For example, Walmart in
China and Carrefour in France use
blockchain technology to provide
their customers with greater
transparency as to their supply
chains. Carrefour built its platform on
Ethereum open-source code and has “It benefits our industry by
made the platform available to its lowering administrative
partners through a consortium costs, which allows us to
blockchain. Producers, veterinarians, focus on our core business
processors and transporters have all
– risk coverage.” (6)
received a mobile app that they can
use to track the life cycle of a given Regis Delayat
food product. Customers can access SCOR
the app in-store by scanning a QR
code, allowing them to verify that the

(6) Blockchain, a catalyst for new approaches in insurance – Part 1, March 2017
https://www.pwc.com/gx/en/insurance/assets/blockchain-a-catalyst.pdf

8 | Blockchain in insurance – Market launches and changes in 2019

 Traceability and KYC

The consortium was made up of 38 insurers in early Under no circumstances is the Patrimonia app
2018 and has since been incorporated into an meant to replace an expert. Instead, it allows
independent company to go even further. property claims to be brought into the digital era.
Monuma gets back to the customer within three
How startups approach traceability days, versus one month on average, at a cost of €10
for a claim assessment and €50 for an expert
In the world of startups, a paradigm shift occurred opinion (base cost negotiable depending on
between 2017 and 2018, as businesses moved from volume).
creating PoCs alongside insurers to actually
launching solutions on the market. A good example
is Monuma, a French startup seeking to connect its “ Blockchain is a global data storage
customers with an expert on a 24/7 basis. Through system for secure, encrypted and
a mobile app, customers can take photos of their immutable data, using a decentralised
property and substantiate its existence, ownership digital seal. The data, which are
and value by entering data into the blockchain. If a
therefore binding, can be consulted by
claim is covered, the expert can value the
customer’s losses on the basis of these anyone.”
substantiating data. Emmanuel Moyrand
CEO/co-founder of Monuma
More specifically, users upload their proof of
identity and the photos of their property onto the
Patrimonia by Monuma app. The patented KeeeX
solution injects trusted metadata into files without Fully integrated into the expert’s auditing, analysis
changing their format. They are timestamped in and management process, Monuma accelerates the
real time and their unique hash is anchored on the ability to secure real time property evidence,
Bitcoin blockchain to prove the existence of the file prepares the expert’s efficient on-site intervention
on a given date. KeeeX provides its “sidechain” to with valid evidence, creates a relationship of
make transactions anonymous, allow scalability co-development between the policyholder and the
and to reduce costs. The electronic signature is insurer, and values the property over time.
obtained using cryptographic methods that prevent Following its initial market launch with the support
its falsification. Each signatory is clearly identified of Allianz France, Monuma is now exploring other
and cannot deny that they approved the document. use cases.

Partnership with Valoo

7/2018

Partnership with Moonshot

Situational insurance
4/2018 EFMA Innovation Awards
6/2018

Finance and
Innovation division Allianz France incubator
11/2017 2/2018

CES Las Vegas

1/2018

Creation of Monuma
02/2017

PwC | 9
 "Valoo is seizing the opportunity to get
Valoo, a digital management platform for personal
a better understanding of blockchain
belongings and partner of a variety of insurers,
including La Baloise, Maif, Macif and Matmut, has technology, which will be used first and
recently made the shift to blockchain technology. foremost to ensure the integrity,
traceability and security of data
Their number one reason? A desire to meet user entrusted to us by users.
demand for online expert services. The Monuma
solution was the right fit, not just because of its In a second phase, blockchain will be
blockchain-based system, but because it fully
ramped up to support the roll-out of a
digitises the customer experience.
new economic model whereby Valoo
Using blockchain to audit data and carry out will provide purchase and multiple-
transactions requires taking a fresh perspective and sale solutions for goods and services
applying innovative techniques to maintain an audit brought together via smart contracts
trail. In light of this, PwC’s teams have developed a between individual customers,
specific technological audit methodology to meet
retailers, credit institutions and
the emerging needs of their clients, particularly in
relation to operational and cybersecurity issues.
insurers."
Similarly, the process of auditing the financial David Gascoin
statements of a company that uses blockchain must
CEO/co-founder of Valoo.com
involve reviewing the technology’s implementation,
assessing the quality of incoming and outgoing
data, and identifying cybersecurity-related risks.
During its audit of the first European institutional
fund with cryptocurrency holdings (the Tobam
Bitcoin Fund), PwC had to tailor its traditional
approach to these challenges.

10 | Blockchain in insurance – Market launches and changes in 2019

Traceability and KYC

PwC | 11
 Smart contracts and
automation

03 With the secure ledger function coming

into play at the beginning of the
insurance product value chain (identity of
When FlightStats records a delay,
payment is triggered automatically.

the policyholder, certification), smart In this example, blockchain provides a

contracts will automate contract way to bring in a third party which
management processes until determines whether a predetermined
reimbursement. amount of compensation should be
paid.
Delayed flights: the first blockchain
use case to be launched on the AXA plans to extend this first
market by AXA blockchain product to:

In September 2017, AXA launched • f light cancellations;

Fizzy, an Ethereum blockchain-based
parametric insurance platform that • and subsequently to other areas of
could well be the insurance industry’s the insurance business (notably
first decentralised autonomous parametric), including rainfall
organisation (DAO). insurance, pollution insurance, lack
of snow insurance, tsunami
Teams across AXA joined forces to insurance and volcanic ash
offer customers flight delay insurance insurance.
fully backed by the Ethereum public
blockchain through a smart contract. Using a public blockchain provides
Customers can take out the cover up customers with guaranteed
to 15 days before a flight and will transparency and security. Its
know from the moment the policy is efficiency lies in its binary format and
taken out how much compensation the code is inexpensive to run. To
they are entitled to if their flight is develop use cases that are more
delayed. After landing, the smart complex, innovation is needed and
contract compares the airline’s the blockchain must be coupled with
scheduled time of arrival with its other reliable sources of data (IoT, for
actual time of arrival, as reported by example).
FlightStats. If a customer’s plane is
more than two hours late,
compensation is paid out
automatically, with no need to file a
claim or provide proof of loss to Fizzy,
as it already has the necessary
information and evidence.

12 | Blockchain in insurance – Market launches and changes in 2019

 Smart contracts and automation

Other insurers offer comparable “proactive This can be considered as a smart strategy. From a
insurance” products which do not use blockchain business model point of view, Fizzy is setting up the
technology. Blockchain’s value-added in the case of variabilisation of costs for the backoffice.
cancellation insurance is debatable, particularly
given that customers primarily expect cancellation Insurers will therefore have to assess feasibility and
insurance to be packaged together with health return on investment for each link in their value
insurance/medical assistance, which is not as chain and then choose the products they think
compatible with blockchain. However, initiating a should be integrated into a blockchain architecture.
first basic use case enabled AXA to gain a foothold It goes without saying that some types of situations
in the blockchain ecosystem. It also enabled AXA to will continue to require human intervention in the
get a better grasp of the technologies and issues long term.
related to governance, cybersecurity and the
business model, as well as of regulatory, accounting,
legal and tax requirements.

Purchase of Event Execution Payment

insurance

The contract is issued The event corresponds, in Smart contracts verify the If the customer is to receive
directly via blockchain. The this case, to a transaction or data from the transaction or payment in cryptocurrency,
terms, once accepted by the a data provided by an oracle the oracle against the the smart contract will
policyholder, are inviolable. (reliable data source, such encrypted data encoded in automatically compensate
All conditions for executing as IoT, or a recognised the contract to determine them via blockchain. For a
the claim are encoded in the international body). whether or not to invoke the payment in fiat currency
contract claim are encoded contract. (EUR or USD), payment will
in the contract (data be received via blockchain
providing information on the operating in conjunction with
event, insurance benefits an exchange platform.
and the payment terms of
these benefits).

PwC | 13
Blockchain serving captive insurers via a B2B
application by Allianz

Allianz has decided to focus on B2B applications,

launching a blockchain-based captive insurance
solution in 2017. Captive insurance was a deliberate
choice, as it is a highly complex area of business for "Blockchain provides a single point of
multinationals that decide to self-insure. truth that acts as a springboard for
Leveraging its international network and its collaboration. Above all, it allows us to
experience adapting to local regulations, Allianz meet our customers’ needs faster and
developed a consortium blockchain platform
provide the best possible service by
bringing together the various parties involved,
including the corporate client’s captive insurer, its
optimising processes and identifying
local subsidiaries and Allianz itself in the role of low value-added tasks"
fronting company. Bob Crozier
The platform streamlines three crucial processes in
Head of Global Blockchain Centre of
the captive insurance cycle – renewing annual Competence, Allianz Technology
policies, paying premiums, and filing and settling
claims – which traditionally involve transferring
large volumes of information and making
international payments.

With blockchain technology, data can be managed

transparently and securely and payments made in
mere days instead of weeks. For example, Citi
Treasury and Trade Solutions has leveraged its
CitiConnect® Application Program Interface (API)
solution to accept payment instructions from
Allianz’s captive insurance blockchain prototype. Bob Crozier, Head of Allianz’s Global Blockchain
Centre of Competence, has set out to instil the
insurer with a strong blockchain culture. To help
blockchain make the necessary transition from
disruptive technology to core business solution,
MAIN AVANTAGES
Allianz has brought together all of the relevant
stakeholders, from industry experts across the value
chain to blockchain engineers. It has also applied
design thinking, whereby experts first harness their
Speed
industry knowledge to identify the issues facing
customers or employees, then the team determines
whether blockchain technology is the best fit,
before potentially tasking engineers to develop a
Transparency solution. Agile methodology is used to design and
With all participants having develop the blockchain-based services.
access to the data

In response to the skills shortage in the blockchain

industry, particularly in terms of technology
Secure payments
development, Allianz has partnered with the
Technical University of Munich and Fortiss to
nurture top talent.

Less manual data entry

14 | Blockchain in insurance – Market launches and changes in 2019

 Smart contracts and automation

Smart contracts brought to market by The In particular, the non-profit plans to transform
Institutes RiskBlock Alliance consortium opportunities arising in other links of the insurance
value chain, as well as other regions and even other
In North America, many insurers have chosen to industries, such as transport and shipping, where
work with an independent “trusted third party” to we are also seeing demand for blockchain
support their consortium blockchain initiatives. The technology and a complementary insurance service.
Institutes, for example, is a non-profit organisation Thanks to the initiative, an entire ecosystem is
that was originally formed out of Wharton and set taking shape encompassing regulators, startups,
up to provide education and research to insurers. A incubators and universities as well as insurance
new arm of the organization — The Institutes companies.
RiskBlock Alliance — is increasingly focusing on
helping the industry understand and adapt to
blockchain technology. Its model is grounded in the
belief that the industry needs a neutral third party
to ensure that blockchain is correctly managed, and
is designed both to enable information to be shared
optimally among the various players and to speed
up development of the technology. As a not for
"We’ve already risen to the following
profit, it differs from other consortiums found in challenges:
other parts of the world, such as the B3i model
discussed above, which have set up a for-profit body 1. r eassure insurance companies that
to manage their blockchain. we are neutral and that there is no
favouritism among players;
The Institutes has been working with the industry
to facilitate blockchain working groups and design 2. remaining open to different kinds of
solutions since late 2016. In 2017, it finalised four
blockchain technology;
proofs of concept, launched the legal entity (The
RiskBlock Alliance) and built an initial blockchain
architecture. To close out 2017, RiskBlock brought a
3. meaningfully involve stakeholders,
mobile application to market which was designed to which was definitely the main
verify proof of insurance. Thus far in 2018, the challenge given that blockchain is
Institutes RiskBlock Alliance has teamed up with inherently decentralised.
some 100 consultants to further refine the
architecture and bring the four use cases to a The Institutes RiskBlock Alliance is
minimal viable product (MVP) stage. now focusing on new challenges, such
as incorporating blockchain into legacy
For The Institutes RiskBlock Alliance, the
technology is chosen based on the results of use tools, delivering services at the right
case analyses rather than an ideological belief in pace in step with technology adoption,
blockchain. In concrete terms, each product is and acquiring the right technical
designed with the intention of being reused if skills."
appropriate for future applications. Following the
proof of insurance launch, RiskBlock plans to Peter Miller
launch a first notice of loss application by close of Chair of the Board at RiskBlock Alliance
summer, a net settlement application and a
parametric application within 2018 or by early
2019. Further, they aim to start working groups
related to at least ten more blockchain products by
the end of 2018, then continue to expand its
architecture and portfolio of applications in 2019
and 2020.

PwC | 15
 ICOs and the token
economy

04 An initial coin offering (ICO) is a new

means of raising capital via the issue of
tokens on a public blockchain
The value of a network is
proportionate to its number of users:
there was not much reason for a user
to create a Facebook account in 2004.
Tokens are exchangeable for Today, we use Facebook because all of
cryptocurrency or regular currency, our friends are already on the site. If
but they must also give their owners they have Facebook accounts, it is
access to the service developed by the because all of their friends do too.
company that initiated the ICO, which ICOs will help to speed up the
does not follow the same principle as development of blockchain protocols
an initial product offering (IPO). For and redistribute value fairly.
example, Augur tokens allow owners
to bet on an event of their choice.

ICOs are changing the rules of the

digital market, first and foremost
through the network effect, which is
behind the dominance of platforms
like Facebook, Airbnb and BlaBlaCar.

Traditional network effect

Use

Bootstrap

Own use = financial use

Number of users

16 | Blockchain in insurance – Market launches and changes in 2019

 ICOs and the token economy

Network effect – token economy

Use

Financial use

Own use

Number of users

808 Labs seeks to disrupt the booking market

The startup 808 Labs developed the Booking Token

Unit (BTU) protocol and issued its BTU
cryptocurrency for companies. BTU’s goal is to
disrupt the booking market, worth USD 5,000
billion. Twenty percent of this total is captured by
centralised platforms (such as booking.com), and
service providers (including hotels, restaurants and What is the three-step process for
car rental companies) have become highly companies using the BTU protocol?
dependent on these few “winner takes all” players.
1. a
 ssessing business cases and
808 Labs provides access to an open-source,
economic opportunities;
Ethereum-based program that allows any company
to use the BTU protocol to carry out commercial
transactions. For example, media companies can
2. analysing the impact on existing
implement the BTU protocol to better monetise their systems;
recommendations and thereby recover profits lost to
online booking platforms. 3. a ssisting in purchasing BTU tokens
and recognising them in accounting
documents.
Vidal Chriqui
Co-founder of 808 Labs

PwC | 17
ICOs are also an excellent way for In the first quarter of 2018, some 230
blockchain-based platform developers collective investment undertakings
to attract talent to further their work. had holdings in cryptoassets. Just
There is currently a serious lack of under USD 4 billion in ICO funds was
blockchain technology experts, and raised in 2017 and this amount is
those who have mastered blockchain expected to rise sharply in 2018, with
are typically millennials who more a total of USD 16 billion raised in the
and more often would rather be paid first half of the year alone.
in cryptocurrency than in stock
options (7). Offering tokens through an As the ecosystem continues to
ICO to win over talented individuals develop, we are witnessing the
whose contributions will help “tokenization” of all industries,
maximise a service’s chances of including online booking, data
success is expected to become an management, community insurance
increasingly widespread practice. and power utilities. The trading of
assets is becoming more fluid, with
In addition, ICOs are breaking down traditional assets being converted into
the barrier that once separated tokens or assets being created for the
professional investors (business specific purpose of tokenization.
angels or VCs) from individual Tokenization has resulted in value
investors, empowering any person to creation being redistributed to
invest in the services they find protocol users.
promising. ICOs are shifting the
paradigm by offering tokens that As illustrated by the BTU protocol,
serve as an incentive for investors to protocol users are increasingly
join the network as early as possible, involved in the venture and also own
when tokens have a relatively low tokens. As the number of users
value before the service is adopted. increases, they contribute to the
Traditional VC funds are closely success and value of the BTU protocol.
following the ICO trend, as
demonstrated by Polychain, the first To conclude, the nascent development
VC fund to specialise in the token of ICOs is not devoid of risk, with
economy. The company raised USD 10 legal, regulatory, cybersecurity,
million in capital from Union Square reputational and operational risks all
Ventures and Andreessen Horowitz. coming into play. Accordingly, new
In June 2018, Andreessen Horowitz specialised players are emerging to
announced that it was creating a fund reduce these risks, while new
focused on blockchain and opportunities arise for insurers to
cryptocurrencies, which has already offer insurance products specific to
collected USD 300 million. ICOs.

(7) https://www.bloomberg.com/news/articles/2017-11-08/millennials-ready-to-ditch-stocks-to-keep-bitcoin-rally-alive

18 | Blockchain in insurance – Market launches and changes in 2019

 ICOs and the token economy

Booking
Housing rental (BTU protocol)

Token
Car rental

P2P insurance
Microinsurance

Local products
Decentralised cloud (Golem)

PwC | 19
 Point of view
Sandrine Cullaffroz-Jover and Nicolas Mordaunt-Crook,
French avocats registered with the Hauts-de-Seine bar

The abundance of assets based on blockchain Usual distinctions

technology, and the diversity of projects and
solutions available collectively seem to offer an Different economic “categories” are usually
infinite number of possibilities… were it not for the distinguished according to the projects with which
legal and regulatory framework. The difficulties tokens are associated, the counterpart to which they
and barriers encountered to date can mostly be give entitlement, and the value they have – or
attributed to the inadequacy of the current subsequently acquire. These categories are not
framework, combined with the concerns of certain necessarily closed: there are thus common elements
regulators, who are seeking to retain their oversight between a cryptocurrency issued for its own sake
of transactions that are often risky for investors. and a token issued in consideration for a project
whose exchange value might subsequently be
Some countries, like the United States, have recognised. Similarly, a token initially representing
matched the ICO regulatory framework with that of the right to use any service (virtual storage space,
securities. Others such as China have simply etc.) may give rise to a proprietary right linked to
prohibited them. France will be one of the first the success of the underlying project, or even
countries in the world to adopt ad hoc regulations acquire an exchange value on the secondary
on ICOs if it passes a new law known as PACTE market.
(Plan d’action pour la croissance et la transformation
des entreprises – action plan for the growth and In its consultation on ICOs launched in autumn
transformation of businesses) due to be debated in 2017, the AMF itself wondered if it might not be
the French parliament at the end of 2018. possible to classify tokens into two broad categories,
identifying their characteristics as follows:
The future French regulations will introduce an
optional certification granted by the AMF (Autorité • utility tokens that grant a right of use to their
des marchés financiers), the French securities owner by allowing them to use the technology
regulator, to French white papers organising an ICO and/or services distributed by the issuer;
(the simplified equivalent of an IPO prospectus).
This quality label will send positive signals to • equity tokens that grant financial rights and/or
investors, rewarding token issuers that comply with voting rights.
protective standards such as setting up an escrow
account or adopting KYC rules. A white list of all Ultimately though, the legal analysis of the rules
issuers holding the label will be compiled. It will be applicable to a given token must not be based on the
a valuable tool for investors and will help limit the “category” to which it is presumed to belong but
many cases of fraud. rather on the specific legal nature of the rights
granted to its holder.

20 | Blockchain in insurance – Market launches and changes in 2019

 Point of view

First main findings and position statements The approach outlined above underlies recent
adjustments made to the French regulatory
According to the summary of the AMF consultation, framework to incorporate some of the developments
market participants seem to agree with the linked to the blockchain – from the initial issue of
regulator that the tokens issued so far in France do tokens to their trading on the secondary market.
not have sufficiently similar characteristics to those However, the answers are still incomplete, as shown
of a financial security to place them in the same more particularly by the obstacles encountered in
category. Even if an “equity” token has certain the field of collective investment.
patrimonial attributes such as the remuneration of
the owner, it must still be specifically linked to the The goal is to provide a flexible and attractive legal
results of a company in order to be considered a framework in order to encourage investments in
share. Nevertheless, the AMF is also being practical cryptoassets. Although France is not currently at
in considering that the legal analysis of this the forefront of the countries hosting the most ICOs,
situation should not be guided solely by rules: either in number or volu me, this turning point is an
simply because certain characteristics associated, excellent opportunity to establish a leading position
for example, with a share (e.g., the right to a in the field.
liquidation bonus, the right to vote) are missing
does not mean a token cannot be treated in the
same way as that share.

Without taking into account those situations in

which tokens might in the future be qualified as
securities, the AMF was quick to conclude that a
rulebook similar to that governing “intermediaries
in miscellaneous assets”, as defined in the French
Monetary and Financial Code (Code monétaire et
financier), might be applied to the token issuers.
However, there is ongoing debate on this issue, as
the current application of the “intermediaries in
miscellaneous assets” framework seems
problematic primarily – but not only – because it
does not govern the assets themselves inasmuch as
the intermediary, depending on the characteristics
of the offer. This is why article 26 of the proposed
PACTE law includes a whole chapter devoted to
token issuers, as part of a section otherwise
common to “intermediaries in miscellaneous
assets”.

PwC | 21
 Conclusion

2017-2018 marked the transition Do they show the extent of the ICOs offer startups and insurers
from PoCs to the actual market potential gains introduced by genuine flexibility when it comes
launch of products. Early blockchain technology? Probably to raising capital, hiring talent
adopters have already learned not, especially since blockchain is and forming captive bases of
that blockchain technology can not (yet) advanced enough to future users of the insurance
offer a transparent, real-time offer insurers a true products and services that fit
customer experience by transformation/automation of with these use cases. ICOs should
optimising processes. intra-insurer processes. The be viewed in the wider context of
market launches have above all the tokenization of the economy,
A large swath of the ecosystem served to educate people, where tokens representing assets
has yet to assimilate the topic. particularly executives and are exchanged, with traditional
Blockchain technologies, executive committee members in assets being converted into
currently overabundant as is the the insurance industry. tokens or assets being created for
case for any emerging market, the specific purpose of
are not understood by a sufficient We are now approaching the tokenization. This new paradigm
number of players. Therefore, second hurdle: the B3i initiative, opens the door to a higher level of
challenges persist regarding how in particular, shows the benefits fluidity in economic exchange
to best approach technical and to be gained by insurers by and investments.
functional governance, and pooling data to facilitate
above all, how to determine the reinsurance processes. Interest in A more complex ecosystem is
right use cases. blockchain protocols is effectively emerging and with it comes
higher when use cases encompass additional risks, but insurers have
The first hurdle has been cleared, transactions involving exchanges the opportunity to help
as evidenced by the first market with multiple third parties, which customers face them. Beyond
launches of insurance solutions requires a real change of being an enabler, blockchain
(parametric insurance products, direction in such a data-centric technology may represent a new
expert appraisal solutions, etc.) industry. business sector for the insurance
via smart contracts. These market with the potential for new
solutions have demonstrated the The gains will be greatest if products and services tailored to
reliability of decentralised insurers focus their the needs of the blockchain
protocols, particularly for experimentations on increasingly community, such as insurance
ensuring the integrity of complex use cases, from the cover for cryptocurrency and
exchanged data, contributing a secured registration of user data ICOs.
starter level of automation and to the issue of smart contracts on
offering a high quality user the blockchain, not to mention
experience. interconnectivity with IoT and
decentralised P2P insurance.

22 | Blockchain in insurance – Market launches and changes in 2019

 Point of view

Technology forecast

End state?

The roadmap needs to be developed against

Operational
the future for Blockchain and the recognition
Advances in scalability of
of the need to «design in» flexibility Blockchain networks as there
networks continue to grow
Privacy larger and hold increasing
volumes of data.
Future innovations Innovations
in cyber-security
within the Blockchain
ecosphere.
Development now Legal & regulatory

New laws come into

play in order to keep
Proof of concepts pace with the changing
Research & innovation environment.
Industries undertaking
Many providers and proof of concepts to
platforms coming to the ideas to keep pace with
market with technology disruption.
innovations.

PwC’s Digital Services

Confidential information for the sole benefit and use of PwC’s client

PwC | 23
 Point of view

Appendices

PwC | 25
 Presentation of PwC

PwC, a worldwide An international network guaranteeing you

will have local support in every country
leader in audit and where you do business

advisory services Backed by a powerful global audit network, PwC

has the means to support you in all of your
countries of operation, now and in the future.
Our lines of service
• Audit of and issuance of opinion on Being a part of the PwC network means being able
financial statements to draw on a unique, standardised set of audit
• Strategy and consulting advisory technologies and methodologies, training
services programmes and management solutions. In
addition, all of our offices are committed to
• Transaction advisory services
upholding the firm's rules and policies regarding
• Tax and legal advisory services independence and quality.
• Chartered accountancy
The vastness of the PwC network ensures that our
clients can leverage the resources and strength of a
global organisation as well as the informed response
of local teams to cultural and economic specificities.

26 | Blockchain in insurance – Market launches and changes in 2019

 Presentation of PwC

Build trust in society and

solve important problems
PwC's corporate purpose is to instil the kind of trust that
society, economies and companies need while helping
them to solve critical challenges.
Western Europe
72 200
Central and Eastern Europe
10 500
Middle East and Africa

Our people 14 000

Asia
60 200
Americas Australasia and Pacific Islands
71 000 8 300

236 200
people

158
countries

37,7Md$
in revenue for the year
ended 30 June 2017

736
offices

PwC | 27
PwC insurance capability
We are market leaders

A truly global
Over 7,640
networkInsurance: insurance people
PwC at a glance
globally

Asia Pacific Tax

1,405 760

Americas
3,410 By region By line of services
Advisory
1,935

EMEA Assurance

2,825 4,925

PwC combines unique Blockchain Capability Regulatory Understanding

The PwC technology team have deep We will utilise SMEs in Insurance
experience of delivering blockchain delivery skills having sector regulation to ensure that any
built and deployed live blockchain wider regulatory requirements are
blockchain solutions with the applications and having completed a met and any potential concerns or
depth of Insurance industry number of POC exercises restrictions considered
and regulatory knowledge that
will help you define a robust
and effective approach.
Technology Capability Experience
The team have over 150+ years The team has delivered a number
We are independent of any experience innovating and delivering of FinTech and non FinTech based
business critical platforms for some blockchain proof of concepts
specific technology provider of the worlds largest brands blending technology skills with the
and can therefore give clear deep domain knowledge of PwC’s
Insurance experts.
and unbiased guidance into
the technology options
available.
Global Footprint Independent Perspective
Our global footprint provides us with As an independent firm we are well
coverage of all major markets and the positioned to provide a clear and
scale to engage experts in any location objective perspective on technology
as required by the project options and preferred solutions

28 | Blockchain in insurance – Market launches and changes in 2019

 Presentation of PwC

Proposition and services

Strategy
• Understand overall business impact.
• Map the current environment.
• Leverage our research platform.
• Discover and prioritise use cases.
• Identify partnership options.
• Understand the impact on the legacy environment.
• Develop adoption strategy.
• Develop execution roadmap.
• Avoid regret spend.

Design
• Use case development.
• Integrated architecture design/product
selection.
• Business process definition (internal and
between actors).
• Support policies, governance and controls. Blockchain
Go-Live Assurance
•
• Execute go-live assurance
plan.
• Post execution support.
• Further stress-testing of
applications for future
Exectution implementations.
• Establish blockchain lab. • Delivery assessment.
• Agile development of PoCs. • Skill transfer and training.
• Consortia establishment
and management.
• Review legacy systems
• Product implementation post-implementation.
and integration. • Measure ROI.

We do things differently

DesignThink Product Delivery FinTech

• Human Centred • Delivery Focused • Blockchain
• Asking the right questions • User Centred Design • Traditional Payments
• Defining the problem • Agile Methodology • Alternative Payments
correctly • Collaborative Approach • E-commerce
• Jobs-to-be-Done Framework • User Experience • Peer-to-Peer
• Design Sprints
• Journey Map

Delighting customers
is our passion.
PwC | 29
Acknowledgements

This report was prepared under the supervision of Pauline Adam-Kalfon, Partner,
PwC France Insurance & Blockchain leader, with assistance from Corentin
Richard.

We would like to thank the following people for their contributions:

- Emmanuel Moyrand, CEO/co-founder of Monuma

- David Gascoin, CEO/co-founder of Valoo.com
- Bob Crozier, Head of Global Blockchain Centre of Competence,
Allianz Technology
- Peter Miller, Chair of the Board at RiskBlock Alliance
- Vidal Chriqui, Co-founder of 808 Labs
- Nicolas Mordaunt-Crook, Partner, PwC Société d’Avocats
- Sandrine Cullaffroz-Jover, Director, PwC Société d’Avocats
- Sébastien Choukroun, Manager, Blockchain Lab
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236,000
people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us
at www.pwc.com. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice.
You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty
(express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law,
PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in
reliance on the information contained in this publication or for any decision based on it.

© 2018 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
Please see www.pwc.com/structure for further details.
Contacts

Steve O'Hearn
Partner, PwC Germany, Global Insurance leader
stephen.t.ohearn@pwc.com

Patrick Maeder
Partner, PwC EMEA region Insurance leader
patrick.maeder@pwc.com

Paul Delbridge
Partner, PwC London Market Leader
paul.p.delbridge@pwc.com

Michael Cook
Partner, PwC UK Insurance Blockchain Leader
michael.g.cook@pwc.com

Jimmy Zou
Partner, PwC France Insurance leader
jimmy.zou@pwc.com

Pauline Adam-Kalfon
Partner, PwC France Insurance Blockchain Leader
pauline.adam-kalfon@pwc.com

Arthur Wightman
Partner, PwC Bermuda Insurance leader
arthur.wightman@bm.pwc.com

Joe Calandro
Managing director, Strategy& US, part of PwC network
calandro.joseph@us.pwc.com

Ruud Sommerhalder
Partner, PwC Asia-Pacific region Insurance leader
ruud.s.sommerhalder@hk.pwc.com