American International Group Inc (AIG), together with IBM and Standard Chartered Bank plc, have successfully piloted the first multinational, “smart contract” based insurance policy using blockchain, a distributed ledger technology.
The blockchain solution creates a new level of trust and transparency in the underwriting process, enabling AIG and Standard Chartered to execute multinational coverage more efficiently.
Coordinating management and placement of multiple insurance policies across multiple countries is highly complex, said AIG. The pilot solution was built by IBM and is based on Hyperledger Fabric – a blockchain framework and one of the Hyperledger projects hosted by The Linux Foundation.
Working together, AIG, Standard Chartered and IBM converted a multinational, controlled master policy written in the UK, and three local policies in the US, Singapore and Kenya, into a “smart contract” that provides a shared view of policy data and documentation in real-time. This also allows visibility into coverage and premium payment at the local and master level as well as automated notifications to network participants following payment events. The pilot also demonstrates the ability to include third parties in the network, such as brokers, auditors and other stakeholders, giving them a customized view of policy and payment data and documentation.
Trust and transparency
Mr Rob Schimek, CEO of Commercial, AIG said: “Our pilot proves blockchain has a powerful role to play in the future of insurance. Any technology, including blockchain, that can increase trust and transparency for an industry whose pillars are built on that, should be fully explored. We’re excited to be delivering innovation that matters to our clients – and co-developing key components of this new technology together.”
The three parties chose to execute this initiative in one of the most complicated areas of Commercial Insurance – multinational risk transfer – to better understand blockchain’s potential to reduce friction and increase trust in other areas of the insurance value chain. A