The global blockchain security market is projected to grow from an estimated US$20bn in 2024 to $250bn in the next five years as companies leverage the technology to enhance a variety of different processes, but this growth will also reshape the risk and insurance landscape, according to a new report from Allianz Commercial.
Blockchain technology is often associated with cryptocurrency transactions such as Bitcoin as it is seen to offer a secure and protected way to carry out transfers. However, its adoption continues to evolve significantly within large corporations, with many now leveraging the technology to enhance a variety of different processes such as enabling safe communications, protecting sensitive data and defending against cyber-attacks.
It’s projected rapid growth in future is expected to be driven by the increasing integration of emerging technologies such as artificial intelligence (AI) and the Internet of Things (IoT), designed to enhance threat detection and data security. Blockchain applications are expanding across a diverse range of sectors that necessitate robust security measures, from healthcare to supply chain management to copyright and royalty protection to freight transportation.
At the same time, third-party security audits that help organizations to identify vulnerabilities and build trust are also rising in demand. The increasing use of smart contracts also drives the need for advanced security solutions to prevent unauthorized access and exploitation.
“Increasingly, we’re seeing the integration of AI and blockchain to facilitate complex transactions and enhance AI capabilities through the secure and transparent storage of data. It holds immense potential in ensuring that AI technologies operate with greater transparency and accountability,” says Ana Lopes, Senior Cyber Risk Consultant, Allianz Commercial.
Cyber risk-related challenges
Nevertheless, while secure by design, as with all innovative new technologies, blockchain can still be susceptible to several cyber risk-related challenges that could ultimately undermine its integrity, usability, and trust if they are not correctly managed. Examples include phishing attacks, hackers manipulating coding flaws in smart contracts, as well as so-called “crypto jacking”, which involves attackers infecting computers or devices with malware to mine cryptocurrencies without the owner’s consent.
“Addressing the current cyber security challenges associated with blockchain is crucial to safeguarding the technology’s long-term security, reliability, and widespread adoption,” says Rishi Baviskar, Global Head of Cyber Risk Consulting at Allianz Commercial. “Measures such as regular code audits, multifactor authentication, decentralized governance, and innovative security models are needed to mitigate those risks.”
Additionally, governments must continue to work on regulating this technology to meet legal requirements, ensuring that all necessary safeguards are in place for both businesses and consumers, according to the report.
Insurance industry use cases
The report also notes that blockchain has the potential to revolutionize the insurance industry in future as the technology matures, offering a wide variety of improvements – from efficiency to transparency and, perhaps most importantly, customer service enhancements.
For example, blockchain can simplify underwriting and claims management processes by recording each transaction in real-time, creating a clear and tamper-proof audit trail, and allowing for the secure sharing of customer identity data across multiple insurers. This reduces the time and cost associated with compliance and ensures that personal information is protected. In addition, blockchain can also improve detection and prevention of fraud capabilities.
Through these use cases, and others, many insurers are increasingly leveraging blockchain technology to automate several key processes. From instantaneous transaction completion to automated risk modeling, auditing, and compliance checks, blockchain holds significant potential for enhancing operations and service delivery across multiple areas in future, the report concludes.
This is the second in a series of three reports from Allianz Commercial on cyber risk issues, which were voted the top concern for businesses in the Allianz Risk Barometer 2025. The first looks at Generative AI, its impact on cyber security and how it might impact the insurance sector.
