In a recent interview with Captive International, partner Bradley Kruger, explored the benefits Cayman offers as a jurisdiction for blockchain use in the insurance industry. His comments are included in the following article.
It is now well over ten years since blockchain – or distributed ledger technology (DLT) – appeared on the financial services landscape but it is still capable of generating excitement as its value in transforming processes continues to develop.
Heading into a new decade, the potential this technology has to create significant efficiencies in the handling of payments and customer data is opening up new avenues for opportunity.
In Cayman, where we see a healthy insurance industry alongside a boom in emerging technology companies, attracted by the tax neutrality and business-friendly regulation which have traditionally drawn hedge funds and other businesses to these shores, there are many opportunities for captive insurance companies to provide insurance to businesses which are operating in the blockchain sector.
Some 200+ technology companies have established a presence of some sort in Cayman in the last two to three years and this, in turn, has created an opportunity for Cayman’s insurance community. Disruptive technology companies have often found it a challenge to get insurance, and Cayman’s DLT developers have been no exception. Some Cayman-based technology companies have expressed interest in buying insurance, whether that is D&O (directors and officers) liability or other types of coverage, from local players.
In addition, as blockchain increases its reach and the impact that it is having in specific industries grows, there will be a related need for suitable models of insurance. For instance, the efficiencies that the technology presents for record-keeping and payment-processing, mean that it is already having a significant impact on the global healthcare industry.
Cybersecurity and data protection are huge issues for the healthcare sector and, while it presents challenges on this front, DLT could also become a part of the solution. Blockchain technology and its compatibility with data protection laws remains an issue, but there is confidence that a solution will be found and, if this is not achieved technologically, then regulation may need to adapt to new and future realities.
As we head into 2020, with lawmakers and regulators, globally and in Cayman, starting to address some of these issues, we hope to see the adoption of a suitable framework to assist technology companies, and their insurance providers, to continue making advancements in the development of this exciting and increasingly useful technology.