The document discusses emerging blockchain and insurance technologies. It outlines that blockchain adoption is growing, with over $2 billion in token sales and major cryptocurrency futures markets launching. Blockchains use distributed ledgers to securely record transactions or events verified by multiple independent parties. The document discusses how blockchains could be used in insurance for identity management, claims processing, fraud detection, and smart contracts. It outlines opportunities for blockchain in areas like onboarding, document sharing, and peer-to-peer insurance models. Barriers like regulatory issues and privacy are also discussed.

1. Confidential Information
Blockchain & InsurTech
What’s attainable in the next 18
months?
December 2017

2. Confidential Information
#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

3. Confidential Information
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

4. Confidential Information
What’s in a Blockchain Ledger?
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1. Eye Exam 5/12/2017
Patient 8931
2. Visit on 5/12/2017
3. Need new glasses
4. New prescription
Patient 8931
5. Prescription 99881
filled
6. Follow-up appt
scheduled 6/12/2017
7. Annual Checkup
5/12/2018
1. Eye Exam 5/12/2017
Patient 8931
2. Visit on 5/12/2017
3. Need new glasses
4. New prescription
Patient 8931
5. Prescription 99881
filled
6. Follow-up appt
scheduled 6/12/2017
7. Annual Checkup
5/12/2018
1. Eye Exam 5/12/2017
Patient 8931
2. Visit on 5/12/2017
3. Need new glasses
4. New prescription
Patient 8931
5. Prescription 99881
filled
6. Follow-up appt
scheduled 6/12/2017
7. 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

5. Confidential Information
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

6. Confidential Information
Why will Blockchains get Adopted?
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7. Confidential Information
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

8. Confidential Information
and verified by multiple, independent third parties
Blockchains are…
Recorded events or transactions (called ledger entries)
recorded chronologically, mathematically signed
Blockchain in 3D
• Decentralization
• Disintermediation
• Distributed [Ledger]

9. Confidential Information
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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10. Confidential Information
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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11. Confidential Information
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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12. Confidential Information
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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13. Confidential Information
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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14. Confidential Information
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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15. Confidential Information
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

16. Confidential Information
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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17. Confidential Information
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

18. Confidential Information
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: h275cq14f2aua8a7ljtykbktj5
did: vyma705f2azif5trsnj8did8rm
did: 5j8htbh0rrlb1t5ubf6i3kg3ls
did: wftgnlbw45chgtha95zqa69sbf
did: qhq3k0r1p0jz46tggvcyf98hxk
did: f0e63zuhsbtfunw8hh333f5shc
did: 1lot6cgg2hqgxczwq9ulqrhece
did: z61swni6pshhqhjrvwvrnc6rvp
did: nih1lhusnzafjw1ftfemi530db
did: x17lkee0ekimcubutadi4soqnz
did: 3w1co77529qcg4xesrrl1r7fds

19. Confidential Information
Verifiable Claims
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Issuer
Signs Claim
Holder
Countersign
Claim
Wallet
Verifier
Verify
Signature
Decentralized Identifiers
Blockchain Infrastructure

20. Confidential Information
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
a8a7ljtykbktj5
trsnj8did8rm
5ubf6i3kg3ls
chgtha95zqa6
Encrypted
Asset

21. Confidential Information
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

22. Confidential Information
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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23. Confidential Information
Thank You!

24. Confidential Information
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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