Blockchain – the secure, decentralised and distributed ledger housed on a shared platform – is something that has been discussed by the tech community for a few years now. But the practical implications, and benefits, of blockchain for the risk and insurance business are only just beginning to be realised.
At XL Catlin we are delighted to have worked on a pilot with global shipping giant Maersk, consulting firm EY, fellow insurer MS Amlin, broker Willis Towers Watson, and blockchain vendor Guardtime to support a blockchain platform for marine risk.
After a great deal of work, we are now thrilled to be able to announce that the first phase of this project – which is a register of assets – has now gone live. Now we are working on the next phase which will include smart contracts. It is especially exciting that, with this project, marine, the oldest class of insurance, has become one of the first to embrace blockchain.
Marine insurance is one of the most complex areas of risk transfer. It covers valuable assets on the move across international borders. Factor into that the network of clients, brokers, insurers, co-insurers, reinsurers, captive insurers, mutual insurers and claims professionals involved in the underwriting of marine risks and you begin to see what a complicated line of business this can be.
Like with anything complicated, having the right data is essential. Developing and launching the platform which directly links broker and client has given us masses of additional, real-time data which our underwriters can now use to better understand the risks of marine business and transfer them more effectively. And the really exciting thing is that working with the other partners in this process we have been able to create an ecosystem for marine risk. We believe this will be a driver for innovation across our industry.
Blockchain technology can be applied to risk management and insurance across diverse business sectors such as telecommunications, defence, and aerospace, among many others. One of our clients, for example, has approached us about developing a blockchain for its global property insurance programme. In that instance, using blockchain would enable us to streamline and simplify the premium allocation process by capturing and validating all of the relevant data in a distributed ledger.
We believe that blockchain brings with it real benefits for risk managers and buyers of insurance. So what do risk managers need to know about the technology that has been described by some as the fifth major wave of computing?
Developing and launching this platform has given us some really valuable insights into the benefits that this technology will bring for risk managers.
Among the advantages for risk managers and buyers of insurance are:
The use of Blockchain gives underwriters additional data points that will enable them to understand the risk better;
Blockchain increases the security of insurance transactions;
Blockchain increases the transparency of the insurance process and may also reduce fraud;
The use of Blockchain will remove friction from the insurance chain – improving efficiency and reducing costs for all involved;
Blockchain should reduce errors and detect fraudulent activity;
Blockchain should streamline claims submissions;
Blockchain will enable clients, brokers and underwriters to co-create ecosystems.
Now that the platform is live and ready to go, we are on the cusp of an exciting phase for risk management and transfer. There are many ways in which blockchain can be used to deliver benefits to risk managers and clients. We look forward to working with the industry to drive the use of Blockchain forward.