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ATLANTA — Blockchain technology can save the industry hundreds of millions of dollars, says an expert.
Christopher McDaniel, executive director of the RiskBlock Alliance, a blockchain consortium representing 31 risk management and insurance companies that is part of The Institutes in Malvern, Pennsylvania, discussed the technology during a session at the Wholesale & Specialty Insurance Association’s Annual Marketplace in Atlanta on Monday.
The alliance first launched Canopy, its blockchain framework using the Corda blockchain platform, in September.
As blockchain becomes implemented more often in the insurance space, “the concept of transactions goes away,” said Mr. McDaniel. Any time companies are moving information or money from one point to another, it is on the blockchain itself and “gets synchronized to everyone else,” he said. “Everyone has access to it instantly,” he said. There is “no back and forth” of information.
Multiple players must be involved, however, Mr. McDaniel said. “If you don’t have multiple players, there’s no point in doing it.”
As more firms start to share data, they will become more efficient because they are “no longer moving data and money all over the place,” leading to savings of hundreds of millions of dollars, Mr. McDaniel said.
Mr. McDaniel said the RiskBlock Alliance is a not-for-profit organization owned by the insurance industry, and members must be either an insurer, broker or reinsurer, he said. “The industry is deeply involved in everything we do,” he said.
Also involved are industry organizations including ACORD, the Association for Cooperative Operations Research and Development, a global organization with offices in New York and London, and Windsor, Connecticut-based LIMRA, the life insurance trade group, he said.
He said the organization is also working now with some state regulators, closing the gap between them and insurers so information “is shared by everyone in real time.”
Mr. McDaniel said the project was started about two years ago. At that time, “everybody was doing something different,” he said. “We wanted to create something that was real production,” involving the creation of real solutions that “added real value” to the industry, he said.
“Everybody was reinventing the wheel,” said Mr. McDaniel, leading to multiple networks, which “doesn’t make a lot of sense.” As a result, Canopy, which is the first standardization of blockchain for the industry, was created, he said.
With Canopy, you can have one policy and claim blockchain “and multiple operations can be built off that same set of blockchains. It is the ecosystem for all future applications,” and solves the problem of reinventing the wheel, Mr. McDaniel said.
Every time a new application is written, it introduces new data points, which are built on top of Canopy and makes it stronger, he said. Over time, Canopy will become a superstructure, whose applications everyone has access to, he said. “That’s revolutionary from an insurance standpoint,” Mr. McDaniel said.
“Everyone has access to the same data,” with data and money no longer going back and forth, “all tied into one ecosystem, which is Canopy.”
Mr. McDaniel said the current version, Canopy 2.0, is designed so that participants can share only the information they want to share.
The RiskBlock Alliance has had conversations with vendors including Foster City, California-based Guidewire Software Inc., an insurance software company, about plugging in their solutions or building new ones.
“We want as many different solutions as possible,” which will make it stronger, more useful and of greater value, he said.
Also speaking at the session was Srinivas Pulijala, IT architect, information technology for Munich Reinsurance America Inc. in Princeton, New Jersey, who discussed the basics of blockchain technology.
“I think it is an interesting technology. It has a lot of potential,” he said. Munich Re America is an Alliance member.
The session, which was hosted by WSIA’s U40 group of under-40 members, was moderated by Adam J. Care, Houston-based assistant vice president and senior client company manager for The Hartford Steam Boiler Inspection & Insurance Co., a Munich Reinsurance Co. unit.
Switzerland-based Blockchain Insurance Industry Initiative is considering providing commercial insurance as its second line of business, Ledger Insights reported. The industry association has appointed Antonio Di Marzo as product owner for commercial insurance. The association's first project involved a reinsurance contract for excess of loss.