Late last week, I attended a very informative day long seminar on Blockchain at #Rise, Mumbai. Besides presenting concepts and theories, organisers also had startups leveraging blockchain technologies as well as Blcokchain software vendors sharing their use cases and experiences. One such use case presented was about Life Insurance companies sharing with each other medical records of the customers (with their approval) over a blockchain network.
This blockcain network consists of insurance companies who share the medical records of their customers with other participating companies in the network. Medical exams of customers wanting to buy high value life insurance policies is a critical but time consuming & expensive step in the new business process. And if an insurance company gets hold of the past medical records of its customer, who has applied to the company for company’s insurance policy, then that saves cost as well as time while issuing the policy.
How does it work?
- An Insurance company looking for the medical records of its customer, requests medical records from the network by entering the Aadhaar number.
- An SMS is then sent to the customer requesting the consent to sharing the records with the insurance company.
- On customer’s consent, the records are shared with the insurance company.
- Every insurance company sharing its medical records earns Tokens from the network and the company obtaining the records has to pay Tokens to the system.
Is Blockchain the necessary technology for this use case?
Distributed Ledger Tech (DLT) or Blockchain, is a useful solution for trustless networks, where participants do not need to trust each other while transacting business. DLT ensures that i) the records maintained in the ledger cannot be altered by the participants and ii) the records are verified by multiple participants. In the use case above, there is already high degree of trust between the participating entities and due to their need to maintain high credibility, participants sharing records have very little or no incentive to defraud each other.
In addition, the medical records obtained by the Insurance company sharing the medical records, are from a medical laboratory / clinic appointed by itself. So the source of the records is trustworthy too. And in any case, medical laboratory is not part of the system. Even if it were part of the system, blockcahin or DLT cannot ensure that medical records are accurate.
The business model too has few challenges, which need to be addressed:
No incentive for larger insurance companies participate:
Larger insurance companies would always end up acquiring more customers, thus contributing larger no. of records to the repository, while possibly having lesser opportunities to consume records from the system. On the other hand, smaller insurance companies would have greater opportunities to consume records.
Validity of records only for 6 months
Considering the purchase patterns of life insurance customers and shorter duration validity of records, the probability of the usefulness of the records in the system could be very low.
Tokens have no useful value in the Network:
Tokens exchanged by the participants have no value, unless the companies wanting to consume the service have to purchase the tokens (in case they do not have adequate number of tokens). The model may levy fees on the heavy consumer of records but what does the heavy contributor gain, other than having surplus tokens which have no value.
While business model challenges stated above exist, they could be addressed. Sharing of medical records is a good business problem to solve as it could help insurance companies save costs and time. The use of blockchain technology however, may not be the right choice for addressing this business challenge.