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16 January 2020
It has been more than a decade since blockchain – or distributed ledger technology (DLT) – appeared on the financial services landscape. Yet, it is still capable of generating excitement as its value in transforming processes continues to develop.
The potential for this technology to create significant efficiencies in the handling of payments and customer data is opening up new avenues for opportunity.
Cayman has a healthy insurance industry and has witnessed a boom in emerging technology companies, which are attracted by the tax neutrality and business-friendly regulation that have traditionally attracted hedge funds and other businesses. As such, there are many opportunities for captive insurers to provide insurance to businesses which are operating in the blockchain sector.
More than 200 technology companies have established some sort of presence in Cayman in the past two to three years, which has subsequently 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 be directors' and officers' liability or other types of coverage, from local insurers.
In addition, as blockchain increases its reach and its impact in specific industries grows, this will generate a 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 significantly affecting the global healthcare industry.
Cybersecurity and data protection are huge issues for the healthcare sector. While DLT presents challenges on this front, it could also become part of the solution. Blockchain technology and its compatibility with data protection laws remains an issue. However, 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.
With lawmakers and regulators, both globally and in Cayman, starting to address some of these issues, there is hope that a suitable framework will be adopted to assist technology companies and their insurers to continue making advancements in the development of this exciting and increasingly useful technology.
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