A STEEP framework analysis of the key factors impacting the use of blockchain technology in the insurance industry
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A STEEP framework analysis of the key factors impacting the use of blockchain technology in the insurance industry Simon Grima1 · Jonathan Spiteri1 · Inna Romānova2 Received: 17 September 2019 / Accepted: 3 February 2020 © The Geneva Association 2020
Abstract The insurance industry plays a key role in any modern economy. Blockchain technology promises to completely revolutionise the industry, with several bold claims made in terms of facilitating and speeding up claims settlements and improving fraud management. In this paper, we examine the factors that may influence the extent of blockchain proliferation and penetration within the insurance industry. We adopt the STEEP framework to analyse the key social, technological, environmental, economic and political/legal issues that may impact the insurance industry’s openness or otherwise to blockchain, drawing on a diverse, multi-disciplinary literature. We supplement this with data drawn from 565 European respondents to a survey on blockchain use within the insurance industry. The results emphasise the need for the industry to properly understand and communicate how blockchain can be implemented across different insurance tasks in order to obtain a more tangible view of its benefits for staff, management and customers alike. Keywords Blockchain technology · Distributed ledger technology (DLT) · Insurance markets · STEEP · Risk management
* Simon Grima [email protected] Jonathan Spiteri [email protected] Inna Romānova [email protected] 1
Department of Insurance, Faculty of Economics, Management and Accountancy, University of Malta, Msida, Malta
2
University of Latvia, Riga, Latvia
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S. Grima et al.
Introduction Insuring risks in any economy is a complex multi-dimensional undertaking that interacts with many aspects of our day-to-day lives. Therefore, the insurance industry plays a key role in the management of any modern economy on its continuous development path. The scale of the industry’s investment, measured also by the size of its business, the number of its employees, the assets under management or its contribution to the national GDP and the essential social and economic role it plays in covering personal and business risk, highlights its importance (Liedtke 2007). Crawford et al. (2018) mention that global insurance gross premiums written in 2017 amounted to approximately USD 4.8 trillion. They note that this was a growth of around 3%, led by the savings products in emerging markets. Insurance is a prerequisite for most activities that would not otherwise be possible. However, although there have been growing reforms in this sector over the years, there has not been much change in the overall business model and operations. Intermediaries have played the key role of determining and matching the requirements of the customer with specific tailored insurance products. Technology is continuously changing the nature of risk, enabling the entrance of new businesses into this market, driving the convergence of sectors and
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