Blockchain based Insurance Model for Managing Aging Infrastructure Risks
Blockchain technology is touted as a means – like mechanization before it – to make processes more efficient by removing frictions cause by human error or scalability constraints. Another angle for blockchain technology is the creation of entirely new industries that would not be possible without blockchain technology, but are now possible with blockchain technology.
Instead of extracting value from an existing process, these new applications bring new value into existence where it had not existed before. The following interview with Thomas Wendling of Jacobs Engineering is one such invention.
Managing Aging Infrastructure is an enormous challenge with enormous implications. The productivity of a society and therefore the value of the money that they use is utterly dependent on the quality of their infrastructure. Yet, this is one of the few industries where Insurance still cannot be applied. Thomas Wendling, PE explains one project that may solve this trillion dollar problem – thereby decreasing the net cost of infrastructure by around 20% – with a simple blockchain application currently under development at the Integrated Engineering Blockchain Consortium.
In essence, IEBC proposes the creation of a decentralized database of maintenance and replacement statistics available to insurers, contractors, engineers and owners – much like the health industry has shared data on medical statistics – in order to form insurance products that assure assets are maintained and/or replaced at the optimum time in their life cycle. As a result trillions of dollars of value lost to waste and misallocation can be returned to the market in the form of reduced volatility and increased investment.