The role of blockchain technology in the insurance industry: a case of Old Mutual in KwaZulu-Natal.

Abstract

This study explores the role of blockchain technologies in the insurance industry. One of the sectors across the globe that brings huge financial relief and peace of mind in times of uncertainty and disaster is the insurance industry. This industry makes a substantial contribution to economic expansion and generates a great deal of job chances for those who are unemployed. Insurance firms make money by selling policies to clients, who then pay premiums on a monthly or yearly basis depending on the terms of the agreements they sign. However, the insurance industry is increasingly challenged by operational inefficiency which results in a high fraud rate, a lack of collaboration among the supply chain partners, a lack of sustainability, resilience, high operational costs and data insecurity. All these challenges pose a serious threat to the existence of this industry. Operational inefficiencies have resulted in high premiums for customers due to the prohibitive costs that insurance companies are experiencing. The industry as a whole has been transformed by the fraud rate into a rapid money-making scheme where people are bartering the lives of their families for insurance policies. The study's overarching aim was to determine the role of blockchain technology in combating the rampant issues facing the insurance industry. The first research objective formulated from the aim of the study was to determine the role of blockchain technologies on supply chain performance and operational efficiency in the insurance industry. The second was to determine how blockchain technologies influence supply chain collaboration and organisational effectiveness. The third was to ascertain how blockchain technologies influence the establishment of a resilient competitive supply chain in the insurance industry. The literature reviewed revealed that blockchain technology had the capability to revolutionise the insurance industry by enhancing operational efficiency, reducing operational costs, alleviating fraud, and improving collaboration, sustainability, supply chain resilience, performance and data security. The study employed a case study design with qualitative in-depth interviews among 15 employees of Old Mutual in Durban of which five were senior managers, five supervisors and five financial advisors. The data were then analysed and interpreted using coding to identify themes and subthemes to answer the research questions and achieve the research objectives. The findings extracted from the interviews correlated with the literature review and concurred that Old Mutual’s adoption of blockchain technologies produced improvements in operational efficiency, reducing operational costs, alleviating fraud, and improving collaboration, sustainability, supply chain resilience, performance and data security. These findings indicate that blockchain technologies are necessary to revolutionise the insurance industry ecosystem.