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Thought leadership, insights, and success stories

Distributed Ledgers, Blockchains, and Life and Health Insurance



Distributed ledgers

Distributed ledgers are a simple form of accounting using a mutually agreed-upon method and set of rules for exchanging value and recording transactions. Before blockchain, ancient civilizations devised the first forms of distributed ledger technologies by designating physical objects – precious stones, seashells, animal furs to name a few – as items that represented an individual’s stake of value (ledger) so that every member of society knew who owned what.[1]

Before modern civilizations with established governments and trusted banking systems existed, ancient accounting systems faced many challenges – namely, engendering trust among members. Moreover, precious stones and seashells hardly satisfied modern-day characteristics of money – scarcity, durability, fungibility, divisibility, and transferability.

Evolution of transaction recording

Over time, centralized entities such as governments, banks, and trusted third parties came together to facilitate distributed ledger systems by providing trust and guarantee to the exchange of value between the masses. During the late 1980s, mass storage of data became the primary method of recording these transactions and readily identifying asset ownership. Although computers were ubiquitous in business, paper transactions were the preferred method of recording financial obligations. The 1980s saw the introduction of the TCP/IP protocol, and then in the 1990s, the World Wide Web spawned a new information age, and created a vast supply of digital information shared between people and organizations.

Challenges with exchanging data securely 

Today, data is abundant, but access and the ability to transmit it securely is more often challenging than not. Well-established, reputable firms have garnered consumer trust over time by safeguarding personal assets using centralized databases and systems. Yet, databases are missing a common language or channel to communicate with one another. It’s more than one company’s system not being able to communicate with that of another company: many times, a company’s own departments can’t (or won’t) share or exchange data internally due to issues around trust, interoperability, or both.

Without a commonly accepted, secure medium of exchange, how can people and organizations exchange data apples for data oranges in a practical and secure way?

Is the slow adoption of modern distributed ledger systems a people problem or a technology problem?

Blockchain as a distributed ledger

Enter blockchain, the underlying technology of Bitcoin and a sub-category of distributed ledger technology. Blockchain is a single solution combining software engineering, distributed computing, cryptographic science, and game theory. It allows public or private networks to apply cryptography and digital signatures to secure the electronic transfer of value – data and assets – between people and organizations. Although the technology has existed for more than a decade, only recently have enterprises begun to unlock its multidisciplinary and disruptive value.

Blockchains are uniquely designed and built for specific purposes (protocols), with predetermined, programmable levels of functionality and governance for each explicit purpose. The core concept behind blockchain protocol creation is to ensure that every participant in a particular blockchain know in advance the purpose, functionality, and rules of interacting with that protocol and with its participants. This level of specificity allows developers to code blockchain protocols that are specific to people, entities, industries, or use cases.

3 classifications of blockchains

Currently, blockchains are classified as public, private, semi-private, or federated. This general categorization is dependent on the intended application of the individual blockchain. Private and federated blockchains are most commonly used by enterprises due to their ability to restrict access and harness unique features required to uphold compliance and regulatory requirements.

The most commonly seen blockchain networks can be categorized as follows, keeping in mind that advances in this area are occurring rapidly, which will create opportunities for new and innovative structures:

1. Public (permissionless) – allows any user to join and read/write on the protocol at any time by publicly verifying, sending, or viewing transactions.

2. Private and Semi-Private (permissioned) – allows a single organization or a group of selected and vetted participants to join the blockchain network. Permission to read/write to the blockchain is restricted to those select participants. Verification authority is centralized to adhere to compliance, regulation, and data privacy laws.

3. Consortium (federated / hybrid) – are controlled by governing bodies that identify, vet and select mutually interested parties for the network. These entities can include consortia, corporations, interest groups, stakeholders, and more. Network read/write access is granted to individuals who have a vested and forward-looking interest in the values, intention, and direction of the blockchain as set forth by the consortium members and its established rules. Some consortium members serve as governing members or providers, or selected nodes who can perform verification on behalf of the consortium.

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Life and health insurance use cases

Life and health insurance providers currently handle mass transaction-based workloads using inefficient and siloed legacy systems. These systems do not communicate interdependently, disregarding one of the primary characteristics that define an efficient distributed ledger – transferability. Vertical integration as opposed to horizontal integration causes duplication of record-keeping, process redundancy, and data variance across the value chain. In today’s world, the currency of the life and health industry is data: it is increasingly the foundation for all key decision-making, sustainability, and ultimately, future growth. To exchange proprietary assets effectively and securely while exploring new ways to consume them, life and health providers require a new channel to facilitate B2B and B2C data exchanges in a streamlined and standardized format.

Below are five compelling enterprise blockchain use cases for life and health providers:


1. Automated Insurance Treaty Interchange Distributed Ledgers, Blockchains, and Life and Health Insurance Use Case: Automated Insurance Treaty Interchange


Agents, brokers, direct writers, and reinsurers post millions of transactions a year. Slow, paper-driven processes are used to manage policy sales, engagements, and in-force blocks of business. Insurance treaties define the rules and parameters of nearly all cession and retrocession transactions within the industry. The combined administrative burden and obsolete extract, transform, load (ETL) processes required to convert, store, and transmit data and payments on a recurring transaction schedule to fulfill treaty obligations across the industry is staggering. 


An industry-wide blockchain system to facilitate treaty and facultative transactions, using a protocol designed to host trusted (verifiable) parties in a closed, distributed network with smart contracts programmed as cession and retrocession transaction governance vehicles. Each smart contract can be uniquely deployed to handle specific carrier and reinsurer risk-sharing requirements, perform sequential and recurring administrative functions, and adhere to data privacy and regulatory compliance requirements in an automated fashion.

Distributed Ledgers, Blockchains, and Life and Health Insurance Use Case: Telematics and Active Data Monitoring2. Telematics and Active Data Monitoring


Life and health providers do not currently actively monitor an individual’s health or lifestyle choices using biometric or telematics devices for real-time data collection. This may be generating a major gap in risk exposure and long-term risk analysis. Data monitoring of this accuracy could allow insurers unprecedented views into an insured’s health continuum, allowing for several cutting-edge product enhancements, yet the channel to consume this data does not exist today at the macro level.


A blockchain-based smart contract solution synchronized with consumers’ health devices could actively monitor, collect, and store all insured health activity data. Insurance companies could design entire products to dynamically underwrite and incent consumers by triggering payouts to reward good behavior, such as a completing a two-mile run or walking 10,000 steps in a day using GPS location services. Real-time recurring data of this quality could drive enhanced morbidity modeling and predictive model development to define a new era of bespoke, personalized consumer products.

Distributed Ledgers, Blockchains, and Life and Health Insurance Use Case: Claims Administration and Death Verification Services

3. Claims Administration and Death Verification Services


Claims administrators require proof of a claimant’s eligibility and proof of a deceased individual’s death before paying out claims and death benefits, yet there is no collective single source of truth to identify claimant authenticity and verify proof-of-death globally. Aside from immediate verification of claimant eligibility, thousands of disparate databases with uncleansed, inaccurate death data must be matched and validated before a plausible and accurate death verification can be confirmed. This process delays the length of the claims process while creating the potential risk of incorrectly paying out substantial amounts of money in benefit claims.


A blockchain protocol synchronized with insurers, hospitals, funeral homes, and other mortality data sources (e.g., state-level vital records, the Social Security Administration Death Master File, obituaries, and other global and official registries) that relay beneficiary and mortality data upon request to health and insurance providers. An industry death verification solution would allow for simplified claims administration, avoid overpayments, allow for judicious in-force monitoring, and eliminate clerical errors while reducing time to resolution (benefits paid or denied).

Distributed Ledgers, Blockchains, and Life and Health Insurance Use Case: Medical Supply Chain Management / Pharmaceutical Tracking4. Medical Supply Chain Management / Pharmaceutical Tracking


The World Health Organization estimates that approximately 10% of the world’s pharmaceuticals are counterfeit, leading to hundreds of thousands of deaths due to reliance on precarious globally located and centralized drug databases. There is no end-to-end tracking system in place to identify counterfeit drug batches. The overall cost coupled with the associated risk to consumers and the global healthcare system is overwhelming.


A pharmaceutical blockchain protocol that tracks drug ingredient sourcing, manufacturing, shipping, purchasing, and exchange of drug batches. Such a protocol can verify drug authenticity and combat counterfeit drugs using blockchain’s immutable data tracking and verifiability by all participating organizations. With this type of solution in place, life and health insurers can leverage blockchain technology to monitor which suppliers are vetted and approved while also identifying and flagging when pharmaceutical fraud has occurred, saving countless lives.

Distributed Ledgers, Blockchains, and Life and Health Insurance Use Case: Electronic Health Records Interoperability5. Electronic Health Records Interoperability


Hospital EHRs and EMRs are siloed systems that currently lack sufficient interoperability to share information freely between systems, causing substantial administrative burden as well as new entry processing and versioning issues. Significant regulatory requirements impede centralized authorities from sharing personally identifiable information (PII) and personal health information (PHI). Today, centralized health providers restrict transferability of information because they are legally bound by data privacy regulations compared to the data owners (patients), who are not. Without open, democratized, and individual ownership of personal data assets such as medical records, patients cannot freely access the medical treatment they may require, especially when switching providers or in emergency situations.


A multi-signature blockchain protocol that lets patients safely access and authorize the release of their cryptographically secured medical records – retained and managed by current centralized databases – to businesses requesting consumer PII and PHI life and health providers. Consumers would be able to access these databases using existing centralized security protocols, and blockchain would be the authorization and messaging channel to release (two-party authentication) their personal medical information from centralized authorities. 

Adoption and Barriers 

Today, some industry enterprises are actively participating in blockchain consortiums to test and validate use cases while driving adoption through the creation of trusted communities. Consortiums provide a single location where industry players can safely learn about and explore blockchain, but the majority of product development efforts and output remains largely theoretical, due to the fear, uncertainty, and doubt surrounding blockchain and its utility. 

Several key factors are currently limiting widespread blockchain adoption: 

Uncertain ROI

  • Time, money, and dedicated resources are required to undertake a blockchain initiative. Several dependencies and unknown outcomes exist that could affect return on investment.
  • Downstream logistical issues such as infrastructure replacement, new employee training, and cultural change all impact progressive decision-making.
  • With blockchain technology advancing rapidly, most enterprises have taken a step back to allow themselves the ability to learn from other organization’s successes and failures before fully committing.

Regulatory Challenges

  • Governments and regulatory bodies have not yet defined blockchain regulations clearly, which is creating business risk and vulnerability. This is increasing fears of investing in or launching possible blockchain solutions that might not align with existing or new legal requirements. It is the responsibility of enterprises that wish to implement a new technology such as blockchain to prove its validity to regulatory bodies, yet minimal enterprise efforts in this space has translated to minimal regulatory action.
  • Highly regulated industries are less likely to adopt a new technology and will tend to retain a conservative posture.

Lack of Trust

  • Most companies and industries are not yet comfortable using blockchain technology. In addition, a recent survey determined that at this point in time, all active participants in a blockchain network are not likely to agree upon a specific set of operating rules.[2]
  • Blockchain networks are designed to form bonds of trust among traditionally and mutually distrusting participants. The notion of trust, however is a human trait and challenge, not a technology limitation.

Lack of Expertise

  • Organizations derive their expertise from years of experience and talent specific to certain fields and industries. Because blockchain is not a common skillset for most enterprise IT organizations, few organizational resources exist to impart the knowledge required to research, develop, and launch a blockchain product.


Enterprises that intend to stay relevant in the marketplace are currently working to solve challenging business cases by testing and harnessing new data technologies. Today, distributed ledgers and blockchains are at the forefront of modern data exchange, acting as channels that can help standardize data flows into commonly accepted communication formats between people and organizations.

The challenge facing life and health providers is how best to keep pace with emerging technologies, incorporating them as appropriate, and meet the ever-increasing consumer demand for more innovative products and services, while also avoiding the constant threat of external disruption.  

Taking the time to understand the potential of technologies such as blockchain – to accomplish industry goals of speed, simplification, and efficiency – can only benefit companies and the industry as a whole in the long run.

In upcoming articles we will discuss each use case in detail and illustrate their substantial impact on the life and health industries.

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Written by: Eric Kitowski

Eric Kitowski is an Associate Project Manager on the RGAX Data Analytics team responsible for guiding client innovation products through the RGAX pipeline. Over the past 3 years, he’s been active in the blockchain industry with a specialized focus on enterprise business application of the technology. Eric has participated in several hackathons: and in 2016, he and his team were awarded the runner-up prize for “Arbiter – Automated Insurance Treaty Interchange”. Eric has also been part of the RGAX family for over 2 years and prior to that was a Project Team Lead at RGA. Prior to joining RGA, Eric worked in Emerging Technologies at MasterCard and served 4 years in the United States Marine Corps Infantry. He holds a Bachelor of Science (B.S.) degree in Business Administration and Management from Lindenwood University and a Master of Business Administration (M.B.A.) degree from Washington University in St. Louis’ Olin Business School.

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