“The premium protection gap in IoT alone is around USD 500 bn…”

David Piesse (DP) is a Global Insurance Evangelist. He is on the advisory board of Guardtime a leading cybersecurity company and blockchain provider specialising in cryptography for data integrity. Their keyless signature infrastructure (KSI) is utilized across the defence industry and into the supply chain, insurance, healthcare and manufacturing verticals. They have an underlying application for data privacy laws such as GDPR.  In May 2018 EY, Guardtime and Maersk with members of the insurance industry launched InsurWave the first global commercial insurance blockchain backed platform to enter production commencing with marine insurance.

David has held numerous positions in a 40 year career including Global Insurance Lead for SUN Microsystems, Asia Pacific Chairman for Unirisx, United Nations Risk Management Consultant, Canadian government roles and starting career in Lloyds’ of London. He is currently the Chairman of the International Insurance Society Ambassadors (IIS).

He remains involved in numerous startups for exponential technologies for blockchain and AI across multiple vertical industries. An Asia veteran, he is a recipient of the Kenneth Black Jr Distinguished Service Award from the International Insurance Society.

In this conversation with Praveen Gupta (PG) David shares his vision for and insights on the Internet, Blockchain, Artificial Intelligence and the likes – for the insurance industry.

PG: What is amiss with the Internet that makes it a risky proposition for insurers and insureds?

DP: The Internet was not designed with security in mind. It was designed for academics to exchange documents globally and for DARPA (Defense Advanced Research Projects Agency, US) to preserve and utilise data in the event of a nuclear attack.  As commercial aspirations quickly took hold of the INTERNET it left a security gap and left the INTERNET non attributable causing a reliance on trust and not a measurable truth.  Blockchain facilitates the move from trust to truth by adding a layer over the INTERNET that makes it attributable.  Soon we will need the process to be Quantum immune to preserve privacy by design in a quantum world.

PG: How do intensive and extensive AI applications make internet even more risky?

DP: AI is about augmenting the human to make better decisions based on data sets. These data sets can be large or preferably small in size and trained by machine learning to do a job previously done by humans or jobs too mathematically intensive to be done by humans.  The decision is only as good as the integrity of the data and, therefore, the provenance of the data must be subject to privacy and security by design that is showing this original data, who accessed it and has it been tampered with. The solution here is to link the AI solution as a smart contract to the blockchain substrate to keep the underlying INTERNET attributable, so decisions are based on provenance – in Insurance this would be data driven underwriting executed by a bot.

PG: Any signs of shrinking job opportunities already – with the arrival of AI?

DP: AI has already penetrated blue collar work as robots entered the manufacturing world.  The effect on the white collar worker is a yet unknown but positively thinking it should lead to the removal of mundane tasks and allow creation of new jobs to emerge in developing trends such as environment.  There are those who discuss the possibility of a Utopian or Dystopian society as AI takes over. I think we are a long way from that.  However, should there be a set of losers and winners emerging from AI then it would be tantamount to governments to look at how they handle the losers in terms of re-skilling and other safety nets. 

PG: How critical or overrated is blockchain for the insurance industry?

DP:  Blockchain has been over hyped on recent years but in conjunction with the other exponential technologies is going to be a big game changer for the insurance industry right across the board.  Commercial insurance is the first to successfully adopt blockchain as the value chain moves from horizontal to an ecosystem approach. Healthcare is also a big winner from this technology with life insurance the last to adopt but by 2025 this technology should be mainstream across the industry and even embed insurance into smart devices charging the whole way Insurance is bought and sold.

The prime directive of blockchain is the protection of the data layer (integrity), sovereign based identity and data ownership. All architectures spring from this foundation and the data layer should be agnostic to the ledger layer which is separated from the blockchain.  This will lead to new markets, new products and new investment asset classes.  The ship has well left the station. The consumer market will utilise digital tokens in electronic wallets to use data owned to transact business.  This is already happening in China.

PG: Would you like to highlight some successful personal experience with deployment of blockchain?

DP: I have personally been involved from square one on the first commercial blockchain based insurance platform to enter production called InsurWave.  It has been renewed and has over 1000 ships in production doing real time pricing at sea. It is removing the paper in the marine process and slashing acquisition costs by at least 50% and mitigating fraud, expenses and cyber thus bringing the marine combined ratio to a better place. In addition strong use of smart devices on ships and ports leads to more efficiencies and new opportunities. This also brings the reinsurance into the ecosystem; bring about digital captives and flattening out retrocession panels to get better claims management. InsurWave has already created additional premium that was not possible to collect before and so we are looking at a very high premium protection gap made possible by exponential technology.

PG: Many thanks, David!