Blockchain is an incorruptible real-time ledger of economics that can be encoded to record not just the history of financial transactions but nearly everything of value. All the data in the blockchain exists as a shared and continuously reconciled database.
To this extent, experts say a trust and efficiency engine like blockchain technology has the potential to drive radical change in the insurance industry while improving transparency and outcomes across the entire value chain.
Experts at multinational professional services network, KPMG International say blockchain technology has made its mark in the financial services sector, and there is now a growing trend of its use in the insurance sector.
"After years of excited predictions, at last we are seeing the emergence of solid blockchain use cases in banking, and other industries. Current trends show that greater blockchain use in insurance is on the horizon," said KPMG.
"Though blockchain's capabilities are well-established, insurers are still investigating blockchain's potential applications within their unique organizations, as well as across the industry at large. Many are starting to recognise that blockchain has significant potential to transform the insurance value chain, creating a more secure, efficient, cost-effective, and customer-friendly experience."
One of the main problems around the insurance sector in Zimbabwe has been the issue of a general lack of efficiency and trust.
Blockchain's structural elements can address these issues.
Blockchain, or distributed ledger technology, uses advanced cryptographic techniques to create a secure ledger of information that prevents the unauthorized modification, addition or removal of data. Use of blockchain offers significant advantages over other technologies, key among them is data security and the creation of a clear audit trail.
As blockchain systems are immutable and do not require oversight by a central authority, use of a distributed ledger also opens up new options for secure collaboration between competitors by removing the need for trust between third party organizations.
Said one local insurance player that declined to be named:
"We are very conscious of the relevance and the positive impact of blockchain technology. And we believe that for blockchain technology the time has come for us to embrace it as an insurance industry and take advantage of it to lower delivery of insurance to the population of Zimbabwe."
KPMG South Africa associate director Nevellen Moodley has said they are available to assisting Zimbabwean firms willing to adopt blockchain technology in their systems.
"In terms of helping Zimbabwean companies adopt blockchain technology, we would help them in putting, first, a digital strategy in terms of say, here's your ecosystem, here's your clients, what are they actually buying from you. What would like to offer them in the future and how will they use the blockchain technology to assist them to reach that endpoint.
"We then get whatever partners we need, because we have partnered with a lot of firms globally. The playing field for blockchain is not limited to Africa.
"And it's not only blockchain, but a combination of all technologies, but how to use that technology to enable that vision going forward. So we help them with putting a business case together, helping them assess the business case, get the right numbers together and understanding what the assumptions are. And once they have decided, we help them run the journey."
But before Zimbabwean insurers venture into blockchain, there is need for these companies to move away from their general aversion towards technology in general
ZimSelector business development director Zelina Francis has lamented the slow uptake of technology adoption in the country.
"The traditional insurance providers of Africa (and Zimbabwe) have failed in reaching the financially excluded. They have been slow to tailor their products and services to the local realities. Traditional insurance companies have long and complex contracts and are distributed through costly networks of agents and brokers that only reach the urban elite," she said at an Insurance and Pensions Commission (IPEC) – ZimSelector Mentoring Programme recently
"So what happens to the low-income groups that make up 90 percent of Zimbabwe and other African counties' population. Many of these are vulnerable and has close to no access to financial services.
As the saying goes, "Insurance is sold, not bought." And simply because a segment doesn't actively demand insurance, it doesn't mean they do not want or need it. They may be unaware of (or may not understand) the benefits that an insurance policy provides. They also may not trust the current insurance agencies or may have access to affordable products."
But it's not all bleak for the local insurance sector with regards to adoption of technology.
For instance, the move by the Insurance Council of Zimbabwe (ICZ) to implement online insurance renewals worked positively to reduced leakages in the vehicle insurance sector.
Prior to the implementation of the online insurance renewals, reports were emerging that the motor vehicle insurance landscape in Zimbabwe had been invaded by unscrupulous firms that only cover vehicles on paper. It was, however, not quite ascertained as to why this was happening.
To the extent that insurance firms under the ICZ banner switched from paper documents to information technology (IT) systems that covered the basic scope of insurers' work, there has been a notable improvement in insurance firms' efficiency.
With Zimbabwe's population increasingly becoming younger and more digital savvy, adoption of technologies can help insurance firms boost the country's insurance penetration from very low figures of around 4 percent.
