With an eye towards the growing use of blockchain technology in the digital age, the Rhode Island ‎‎Department of Business Regulation (DBR) has published Insurance Bulletin Number 2018-17 to clarify ‎‎that it allows insurers doing business in the state to use blockchain or distributed ‎‎ledger technology, which DBR defines to mean “the use of a distributed, decentralized, shared, and ‎‎replicated ledger, which may be public or private, permissioned or permissionless, or driven by ‎‎tokenized crypto economics or tokenless. The data on the ledger is protected with cryptography, is ‎‎immutable and auditable, and provides an uncensored truth.”‎

The Bulletin also states that DBR will consider an “electronic record” to “include a record or contract ‎‎that is secured through blockchain technology” and an “electronic signature” as “a signature that is ‎‎secured through blockchain technology.”  DBR will also allow insurers to employ “smart contracts,” ‎‎which DBR defines to mean “an event-driven computer program that executes on a distributed, ‎‎decentralized, shared, and replicated ledger and that is used to automate transactions, including, but ‎‎not limited to, transactions that: (a) take custody over and instruct transfer of assets on that ledger; ‎‎‎(b) create and distribute electronic assets; (c) synchronize information; or (d) manage identity and ‎‎user access to software applications.”‎

DBR’s moves echo recent remarks on the National Association of Insurance Commissioners (NAIC) ‎‎Center for Insurance Policy and Research’s (CIPR) website, which notes the permanence of ‎blockchain-based ‎solutions as a potential benefit because they “provide a reliable audit trail and could ‎potentially reduce ‎fraud risk, streamline policy administration and manage claims in a transparent and ‎irrefutable ‎manner.”  The CIPR website notes the many possible uses of blockchain technology, such ‎as improvements to the ‎security and efficiency in the use of protected health information, credit ‎scores, and travel and ‎automobile insurance, to name a few.  NAIC also observes that blockchain ‎technology could reduce ‎administrative costs through automation of claims administration and other ‎activities.  In allowing ‎insurers doing business in Rhode Island to use blockchain technology, DBR has ‎provided support to ‎allow insurers to move forward to achieve these benefits.‎