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Insurance industry groups continue efforts to develop uses and applications for distributed ledger technology, widely known as blockchain, with two groups set to build on their technology initiatives over the next several months.
Meanwhile, blockchain advocates continue to see potential for wider use of the technology within the insurance and reinsurance sector.
Two industry consortiums, the nonprofit RiskStream Collaborative and B3i Services AG, which began as a nonprofit organization but moved to for-profit in April 2018, expect to launch new blockchain applications this year.
Both groups use Corda, an open source blockchain platform developed by R3CEV in New York.
“Think of us like the operating system in your cellphone,” said Ryan Rugg, global head of insurance at R3CEV in New York.
Corda software is open source and may be accessed via the company’s website, according to Ms. Rugg. There is also a licensed version of the software for businesses, Corda Network, which comes with advanced security and other features as well as tech support.
B3i’s CatXol V1, which can be used in placement of catastrophe excess-of-loss reinsurance, dropped in July, and the consortium expects the next version to be used in the year-end reinsurance renewals season, said John Carolin, CEO of B3i in Zurich.
“Catastrophe excess-of-loss is a high-material contract with low-volume numbers,” Mr. Carolin said. “Globally, there are tens of thousands of these contracts, not millions of them.”
Reinsurance generally is a global market and relatively standardized, he said. “There’s not a lot of local variation that finds its way into contract language, which makes it from a smart contract perspective relatively simple. There’s not a lot of local variation that finds its way into contract language, which makes it from a smart contract perspective relatively simple.”
B3i’s next product, a commercial insurance offering, will involve “a global market but executed locally. There’s a lot more variation,” Mr. Carolin said.
In addition to the individual applications, B3i has also built a functional layer that allows a user to build applications, and which it calls “fluidity,” on top of the Corda operating system, Mr. Carolin said. “There’s a lot of (intellectual property) in there.”
Canopy uses Corda at its roots but includes its own functional tech feature and interfaces, and multiple applications can be built on it so each member company can build its own application using interchangeable, prefabricated technology modules, he said.
RiskStream member companies are working on various versions of two possible uses — a proof of insurance and a first notice of loss — the first of which are slated to be introduced by the end of September, with subsequent introductions through the end of the year, said Christopher G. McDaniel, president of The Institutes RiskStream Collaborative, based in Malvern, Pennsylvania.
The insurance sector sees mainly cloud deployments, while on premises deployments of CORDA, which could involve hardware as well as software, are more common in the banking sector, according to Ms. Rugg. “Most deployments we’ve seen in insurance are cloud.”
Initial applications, she said, such as B3i’s excess-of-loss, involve treaty creation and file sharing, a messaging system and workflow tools, she said. Future applications could, however, include claims and other operations.
Using distributed ledger technology will allow insurers and commercial policyholders greater levels of communication and information sharing, experts say.
“When you get into complex transactions where you’ve got multiple parties touching the value chain and the transaction flow, blockchain enables a level of compliance and transparency across the process that we didn’t have access to before,” said Sandip Patel, Boston-based global managing director of insurance industry for IBM.
A shipment of goods that must cross the globe, for example, will likely be subject to regulatory and other requirements, each of which can be more closely monitored through the better and more immediate communication blockchain affords, he said.
There are also cost savings, Mr. Patel said.
“You start to see efficiencies in the process, because you are eliminating a series of manual checks and rechecks, confirmations, verifications and so on,” Mr. Patel said, adding measured gains in efficiencies can reach into the double-digit percentages when streamlining processes.
B3i, the consortium working to develop digital ledger technology for the insurance and reinsurance industry, has become a private enterprise and is re-evaluating its technology