Last week The Institutes RiskBlock Alliance launched their Canopy 2 blockchain framework. To date, RiskBlock’s planned use cases have focused on Property and Casualty, predominantly personal lines. Yesterday RiskBlock announced the first LIMRA / life insurance use case, Mortality Monitor. The application will use Social Security data, data sources and policyholder records for death notification.
In the past year, RiskBlock and LIMRA ran several labs to identify life insurance and annuity use cases. The Mortality Monitor is one of five applications.
“More than 20 states require life insurers to cross-reference the Social Security Death Master File with their in-force business to ensure that eligible beneficiaries receive the life insurance death benefit when their loved ones die,” said Christopher G. McDaniel, president of the RiskBlock Alliance.
“Using blockchain technology, we will enable companies to not only meet the state regulatory requirements but better serve their customers, identify and prevent fraud, and have proof that the appropriate proceeds have reached intended recipients.”
Robert A. Kerzner, president and CEO of LIMRA said: “While some suggest blockchain is the cure for all that ails the industry, finding the right use case where the technology provides a real advantage is essential. LIMRA’s Blockchain Advisory Council felt strongly that blockchain would be very effective in creating an enhanced and more accurate platform to comply with the Death Master File regulations.”
Death notification history
Ledger Insights previously analyzed different types of insurance blockchain use cases. The majority are low hanging fruit for greater efficiency. Mortality Monitor may fit that category, but if used properly it has the potential to be one of the most social and customer-centric applications possible.
Traditionally insurers waited for a beneficiary to make a life insurance claim. The issue is that some beneficiaries may not be aware of life insurance policies. And if they are aware, they may not have the documents to establish the insurer.
According to the USA Today, one of the problems is that certain insurers used the Social Security Death Master File to stop paying out annuity owners. But they weren’t using the same data for life insurance. Hence they held on to death benefit money longer or didn’t pay out at all.
In 2016 major life insurance companies agreed to pay $7.4 billion in unclaimed benefits. $5 billion was to go directly to beneficiaries and the balance as unclaimed property to the states. While that’s a large sum of money, it represents less than 1.5% of the $600 billion in claims paid out during the previous ten years. However, for the individual beneficiary, it could have an enormous impact.
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