B3i (Blockchain Insurance Industry Initiative), the group of global insurers and reinsurers formed to explore blockchain technology, has presented its newly developed prototype smart contract management system that could result in a productivity gain of up to 30%.
B3i is an initiative of 15 members of the insurance industry, launched in October 2016 to explore the potential use of the distributed ledger technology and develop common standards for the industry. Members are Achmea, Aegon, Ageas, Allianz, Generali, Hannover Re, Liberty Mutual, Munich Re, RGA, SCOR, Sompo Japan Nipponkoa Insurance, Swiss Re, Tokio Marine Holdings, XL Catlin and Zurich Insurance Group.
The prototype, unveiled at the 2017 Monte Carlo RVS conference, has been developed over the past four months. It has the potential to radically simplify how the insurance industry does business. The system covers the major elements of the Property Cat XL reinsurance contract life cycle (i.e. smart contract setup, premium settlement and claim settlement).
The B3i team has also developed an industry business case for the platform across the whole value chain. The consensus amongst the companies is that a productivity gain of up to 30% is achievable. B3i's Sylvain de Crom added that all parties involved will gain from this efficiency. This means that brokers, insurers and reinsurers alike will benefit from lower administration costs, and will be able to offer more attractive rates and fees in the future.
Mr Paul Meeusen of B3i said: "Over the past four months, a dedicated, combined team drawn from B3i member firms has produced a working prototype covering the core functionalities required to enable a distributed smart contract management system for Property Cat XoL contracts. The deployment architecture is already close to a production-ready environment, and the team is preparing for feature enhancements of the prototype and a first deployment into production in 2018."
The platform uses state-of-the-art distributed ledger technology to enable secure, confidential and efficient transactions in a blockchain network. The short-term focus of the platform is on handling reinsurance contracts.
The group’s wider goal is “to build an efficient world-wide industry platform for market participants to more easily cede, handle, and trade risks”.
Next month, a market beta-testing programme for the prototype will be launched. Non-B3i members are welcome to participate in the testing.
The current governance and membership of B3i, based on a contractual agreement between the 15 companies, will remain unchanged until 31st December 2017. A review is underway to consider creating a more permanent operation within a legal entity in 2018. The objective of this entity is to further develop the infrastructure and processes to enable decision agility, talent acquisition and future platform R&D capabilities. Both current B3i members and new testing participants will be actively involved and kept informed of the investment opportunities presented by this next phase.