Blockchain consortium mulls move to speed up insurance claims
- The technology could be extended to the subscription markets
- Evidence suggests blockchain can benefit the captive insurance market
People who claim on their insurance could be paid substantially faster if plans to launch a blockchain platform into the market get the go-ahead.
The Blockchain Insurance Industry Initiative (B3i), a collaboration of insurers and reinsurers from across the globe, said it will seek to extend the use of blockchain beyond reinsurance to the wider insurance world after it launches its first smart contract in 2018.
The organisation is currently in the market testing phase of a smart contract for property catastrophe agreements, which provide protection for large-scale losses caused by hurricanes, earthquakes, fires and floods.
Ken Marke, a spokesperson for B3i, said it has been considering what will follow the development of the property catastrophe contract.
“The logical next step will be to launch a couple more reinsurance contracts. But we want to appeal to primary insurers so we have put a lot of ideas on the table regarding this area. I can’t say what is in it, but there will be a roadmap outlining what order we will do things in,” Marke told Cryptonews.com.
The platform needs to attract as many users as possible so it can optimise its scalability and receive as wide a range of feedback as possible.
Antony Elliott, group head of business transformation at Zurich, a B3i member, suggested the technology could be extended to the subscription markets, where insurers join together to share risk; as well as binding authorities, in which the insurer delegates underwriting to another party. He said these areas have a lot in common with the reinsurance contract currently being tested.
It is also hoped blockchain could streamline and substantially speed up the payment of claims in the mass consumer insurance market, such as home and car insurance. This is because data can be shared and verified far more quickly via blockchain than a traditional manual process.
“Currently the focus is exclusively on the reinsurance proof of concept. If successful, other use cases across the insurance industry will be considered and prioritised amongst the members,” Elliott stated.
Sylvain de Crom, head of R&D at Aegon and product manager for B3i, said blockchain is suitable for many types of insurance but is most efficient in situations where there is a relatively high level of standardisation.
De Crom added: “Technically it would not be overly difficult to extend from reinsurance to insurance. The current focus of B3i is on reinsurance because there is a smaller number of participants and the contract sizes are much more substantial. This makes it easier to provide significant benefits to the industry as a whole – and therefore the policyholder – in the short to medium time-frame.”
There is already evidence to suggest blockchain can benefit the captive insurance market – when a corporation sets up a subsidiary to operate as its own insurer. This is one of the most complex areas of commercial insurance. Allianz Global Corporate & Speciality recently trialled a blockchain prototype for a captive insurance programme and found the technology accelerated and simplified transactions between each party.
Needs to raise capital
B3i is hoping to launch its property cat smart contract later in 2018, but Marke said it depends on how well the development goes.
The organisation also needs to raise capital and introduce a formal structure to manage the platform.
The 15 founding members of B3i are Achmea, Aegon, Ageas, Allianz, Generali, Hannover Re, Liberty Mutual Insurance, Munich Re, RGA, SCOR, Sompo Japan Nipponkoa Insurance, Swiss Re, Tokio Marine Holdings, XL Catlin and Zurich Insurance Group.
The group was joined by a further 23 insurers, brokers and reinsurers to engage with the market testing of the prototype in October 2017.