Report Chain Reaction: How Blockchain Technology Might Transform Wholesale Insurance
DoMutual distributed ledger technologies – commonly known as blockchain – have the potential to transform the global insurance industry. Still, while there is no doubt that blockchain now looms large on the radar screens of financial services businesses, it’s also the case that many businesses are only just starting to get to grips with what is possible. In one recent PwC study1 , 56% of firms said they recognised the importance of blockchain, but 57% conceded they did not yet know how to respond.
Insurers, in particular, are less likely to be familiar with blockchain technologies and applications, the PwC study shows. That’s in line with the more general perception that insurance often lags behind other sectors of financial services in modernising its business processes and technology. This reflects the need to work with large clients, provide bespoke cover, and manage specialist risks; these require data-heavy interactions between multiple participants including brokers, insurers, and reinsurers.
It’s important to recognise that blockchain technologies are already being applied in insurance. For example, in June Allianz unveiled a prototype for using blockchain in the settlement of catastrophe swaps and bonds. XLRAS, meanwhile, is an application from Blem Information Management that helps firms manage their recoveries under ‘excess of loss’ reinsurance. This has recently been enhanced with functionality utilising a blockchain to provide immutable transaction evidence .
Elsewhere, shared workspace provider Vrumi has announced a partnership with blockchain start-up SafeShare to offer Lloyds of London-underwritten insurance products for the hosts that provide office accommodation in its Airbnb-style business3 . We’ve also seen Everledger develop blockchain solutions that help the diamond industry – and its insurers – tackle fraud and theft4 . Moreover, while practical applications of blockchain may not yet be widespread, there is growing awareness of the capabilities of the technology and how these might be of benefit to the insurance industry.
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