Observation | How have Chinese insurance technology giants used blockchain to transform?

Source of this article: BCG Boston Consulting , original title "Working with Blockchain, Insurance Technology Enterprises Leading Industry Technology Innovation", with deletions

Author: He Dayong, Boston Consulting Group (BCG), Managing Director, Global Partner, BCG special financial institution head of China

Xu Muwen is a senior business architect at BCG Digital Ventures.

Despite the general public's trust in blockchain, China's insurance technology industry is far ahead in using blockchain to make changes.

Many Chinese people lack trust in blockchain technology. Some of them are because they are not familiar with blockchain technology or have suffered heavy losses on cryptocurrency projects based on blockchain technology. In fact, it is not uncommon for people to think of blockchain as a cryptocurrency-but unfortunately they usually refer to altcoins (sometimes referred to as "air coins"). This is mainly because a large number of people speculatively invest their wealth in projects under the guise of the “blockchain revolution”, and have suffered heavy losses after the dealer has sold a large number of times.

However, in the view of China's leading insurer companies, blockchain is not just a cryptocurrency transaction or an initial currency issuance (ICO), but a reduction in transaction costs, reduced doubts about credibility, and improved transferability Great opportunities for asset and policy liquidity. Moreover, it is not limited to insurance technology companies, universities, government agencies and commercial institutions have invested a lot of resources in research in related fields, aiming to further develop blockchain technology and its extended application in various vertical industries.

Let us understand how insurance technology companies can use blockchain technology to subvert traditional business models and IT architecture through some current cases in today ’s market.

Ant Financial: Blockchain technology will become the foundation of the new health insurance claims structure

Based on past experience, claims processing for health insurance can take a long time. However, Ant Financial (a non-consolidated affiliate of Alibaba Group) launched a new blockchain-based billing system at the end of 2018, which greatly improved the efficiency of the process.

With the new system, stakeholders such as hospitals, ant service back-ends, and insurance companies all access the blockchain in the form of "consensus nodes" to synchronize data and information flows in real time. The design of the consensus node is to ensure the high reliability of multiple participants in the network, that is, the basic distributed "unit" in the network, and to reach agreement (or consensus) in accordance with specific protocols or algorithms. As long as the infrastructure supporting the blockchain is running well (ie, signal base stations, Wi-Fi bandwidth, laaS cloud configuration, etc.), insurance claims can be processed and verified in seconds.

With reference to the figure below, we can better understand how Ant Financial achieves this.

Let us analyze this chart in detail.

User layer
It shows the behavior of offline users and the flow of funds or claims in the Alipay application. When patients go to the hospital, they only need to bring a smartphone with the Alipay application installed. Once the patient completes the treatment and pays, the hospital will issue an electronic invoice to the "Invoice Butler" applet on the Alipay platform for the patient to view immediately. With just a few clicks, you agree to the insurance terms and conditions, and the claims process will start automatically, and the patient will receive the reimbursement within approximately 5 seconds.
Functional layer
The most important part of this model.

From the perspective of the hospital, tamper-proof invoices can be generated and issued directly on the blockchain without worrying about whether the verification process is reliable. The verification result can be accepted by Alipay and can be used by other consensus nodes to synchronize information.

From the perspective of the ant blockchain, this is like an objectively neutral third party on the chain, responsible for verifying and synchronizing the necessary data information and connecting important stakeholders. Relying on the mechanism that the blockchain itself cannot be tampered with, certificate can be stored, and credible circulation, the ant blockchain can fully eliminate the trust concerns of other participants in the ecosystem. For all parties other than Ant Financial, the transaction friction, time and labor costs due to mistrust in the circulation of medical bills can be fully reduced, and the diversity of the ecosystem will be greatly enriched.

From the perspective of an insurance company, the consensus node aims to improve the efficiency of claims settlement. If the traditional offline operation mode is adopted, even if the patient completes the payment through the e-wallet, he still needs to submit many paper claims materials, meet with the claims specialist, or go to the local offline store of the insurance company and wait at least 10 working days In order to obtain compensation, this is only established if the patient provides the materials in accordance with the requirements. Imagine that if you use the blockchain to track and synchronize when invoices are generated, you can replace the cumbersome verification process with efficient automated identification technology. In this way, problems such as over-standard claims, false claims, and invoice fraud can be eliminated from the source, which is why the verification process can be so smooth and rapid. You only need to wait for the patient's consent and the system to respond, and you can immediately transfer the claim funds.

Infrastructure layer
Although this layer is completely invisible to patients, it is still very important for the normal progress of the process. The nature of the blockchain determines its ability to quickly execute and synchronize anti-fraud instructions. At the same time, the infrastructure layer can ensure the security of the blockchain and provide storage for all data in the network. In the future, it is expected that more and more various types of data will be generated, such as electronic prescriptions issued by hospitals and transferable tokenized insurance assets. Therefore, we need to ensure that the infrastructure layer is sufficiently stable and reliable to avoid data accidents that may result from insufficient infrastructure capabilities.

ZhongAn Insurance: Leading Tokenized Insurance Scene


ZhongAn Insurance (6060.HK) is the first Internet insurance company in China, and its products demonstrate the first-class innovation capabilities in the field of digital insurance. The positive application of blockchain to insurance ecological scenarios and the integration of blockchain with artificial intelligence, big data, cloud computing and other technologies for multi-disciplinary integration and development, as the underlying technical support to output comprehensive solutions to the industry, is ZhongAn in insurance Two characteristics of blockchain technology research in the field of science and technology.


Different from the definition of token in the field of cryptocurrency, in the field of insurance, ZhongAn is based on open assets in view of the problems of long-term co-insurance insured policy flow in the insurance market and the security risks of data privacy protection. The agreement launched a Policy-backed Token to realize the tokenization of insurance assets, and took the first step of data circulation on the blockchain value network. Referring to Figure 2, we can gradually reveal the advantages of tokenization.

Most insurance companies are still using extremely old core systems with low efficiency and high data redundancy. And as we described in the previous case, the processing and verification of paper warranty policies stored on the company's servers takes longer. Tokenization not only migrates the workflow from offline to online, but also empowers the blockchain to generate, synchronize, transfer and even optimize policies with the help of smart contracts.

For example, if the policy I am about to receive is almost the same as the policy already stored in the e-wallet, only a few terms are different. Do I (or my insurance company) need to store both policies at the same time? If you use a traditional system, the answer is of course necessary-no matter how high the overlap between the new policy and the previous policy, any policy with new terms must be completely stored. However, with the help of blockchain, we only need to store a policy that is 100% flexible and the terms can be arranged and combined arbitrarily, and each term only needs to be stored once. All the tokens are coded to the greatest extent suitable for the execution of smart contracts, so that they can be copied, reclassified or recombined according to the "demand" of the policy. From the back-end perspective, each individual token is a combination of multiple lines of code. Therefore, the policy can be fully digitized and 100% transferable.

Customers, products, scenarios and regulations are the four important elements that give the insurance business feasibility. With the tokenization on the blockchain, the trust between users will be improved. The product (in this case, the policy) benefits from tokenization, which not only becomes more systematic, but also easier to code. Since enterprises from different industries can smoothly access the blockchain network, the problem of data isolation is also solved. Further agile product upgrades can be carried out separately, and data isolation issues can be resolved by grafting on business scenarios such as reinsurance, digital insurance, medical insurance, and auto insurance, and regulatory nodes can also directly join the blockchain to allow for strong compliance Regulation becomes possible.

Thanks to improved user experience, product innovation, cost reduction, and efficient supervision, ZhongAn is deploying policy tokenization at a faster rate.

Insurance scenario

Figure 3 illustrates various insurance scenarios. A person is likely to hold policies from different insurance companies, so this example reflects real-world application scenarios.

Illuminating the future of blockchain

We can glimpse from the above two examples how Chinese insurance technology giants can use blockchain technology to stimulate business development and move towards the goal of building a better, faster and safer insurance ecosystem. After that, blockchain technology is likely to become the torch that lights up the insurance industry for a long night. However, it is too early to determine whether the massive resources and energy invested by these insurtech companies can obtain corresponding returns. In any case, those who have ambitions are true pioneers, they paved and illuminate the road ahead, and deserve to win people's respect and recognition.