The Prospects for Using Distributed Ledger Technology in the Russian Insurance Sector

Abstract

Insurance is an essential financial instrument of a risk management system that helps to reduce uncertainty about future financial performance and mitigate consequences of various undesired events. However, the low level of financial literacy in general, and the insurance culture in particular, severely limits insurance market development in Russia. The development of new insurance products that would be understandable and transparent to a consumer is the most relevant issue in this area. The development of the insurance market in the short term is oriented towards the application of new technologies in companies seeking to establish themselves as leaders in the market. Distributed ledger technology (the so-called blockchain technology) is among them. Blockchain technology has characteristics such as stability and equity of participants, the ability to draw up "smart" contracts, which enables its use in the Russian insurance sector. The paper analyzes the possibility and the prospects for the use of the blockchain technology in the insurance sector, and presents available cases of development of insurance products based on technology referred to above. Such products may have a decisive superiority in the market since they reduce time and financial expenditures for the consumer. The insurance sector also has a number of advantages of using blockchain in the form of reduced organizational costs and simplified internal and external interaction with contracting parties. The paper contains an authors' study of the risks that accompany the use of the blockchain technology in the insurance sector. The risks identified on the basis of expert opinion have been identified and ranked, their forms of appearance and vulnerable actors have been presented. In accordance with research findings, the authors conclude that there is a need to develop methods to manage and mitigate new risks which accompany the introduction of digital technologies.

Regional Differentiation of Russian Insurance Market and Consumer Trust

“…The prospects for the use of digital technologies in insurance and their impact on the development of the insurance market in Russia were also considered by the authors of this article earlier, the risks associated with this process were identified and analyzed [Larina, Moryzhenkova, Kukanova, 2020].…”

Development of an insurance industry image assessment index

“…Влияние цифровых каналов на качество обслуживания, корпоративную репутацию и прибыльность возрастает по мере развития рынка. Авторами настоящей статьи также выделялись и анализировались риски в страховании и их влияние на развитие страхового рынка [7].…”