Bahaa Abdul Hussein is a Fintech expert and shares his experiences with his audience through his blogs. Distributed ledger in its simplest form is a record book for keeping account of all the transactions that take place online. It consists of a series of digital data that can be detailed, but not replicated. Every transaction is unique and is visible to all other

1. Distributed ledger technology and the
future of insurance - Bahaa Abdul
Hussein
Bahaa Abdul Hussein is a Fintech expert and shares his experiences with his
audience through his blogs.
Distributed ledger in its simplest form is a record book for keeping account of all the
transactions that take place online. It consists of a series of digital data that can be
detailed, but not replicated. Every transaction is unique and is visible to all other
members in the network. There is not central datastore or a reserve bank that keep a
check on these transactions. So, anyone can make any amount of money via these
transactions and they are not accountable or taxable to any centralized authority.
What is digital ledger technology used for?
It is used to track the assets on the network. Many people, at many places, might
record such details at the same time. There are chances of discrepancy, and for this
reason the rates of cryptocurrencies go up and down, in a flick of an eye.
But it must be noted that digital ledger technology (DLT) only allows authorized users
to access the network. They require cryptographic signatures to access the details.
This technology might create databases that are immutable – therefore, if once
some detail is stored it cannot be deleted. If once such detail is updated, it will be
permanently recorded for an indefinite time (until we have a technology to counter its
effect.)
How is digital ledger helping insurance industry?
First of all, it is improving customer delivery, speeding customer requests, catering to
them on time, with accuracy and urgency. Digital ledgers can be used to redesign
traditional insurance products and application areas that insurance companies found
challenging to address. DLT acts as a catalyst to transform the business ecosystem.
It can efficiently capture the data, connect to insurance contracts, track, upload and
make any changes to the data or the contract.
But is it that simple?
Unfortunately, the implementation is still questionable, as Blockchain is not
everyone’s cup of tea. It is notoriously difficult to understand and to use. But now
new finance platforms are being backed by blockchain, extending the scope of DLT

2. to thrive further within the ecosysyem. The DLT networks have to be permissioned to
prevent unauthrorized access. It should cover:
(1) KYC
(2) Fraud Detection
(3) Pricing and Underwriting
(4) reinsurance
(5) Claims Handling
All these use cases and pointers span the insurance value chain and are being
written with the insurers in mind. Legacy technology and modern processes can
revamp traditional business models with blockchain and can prove to be a boon.
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