News has emerged that the first blockchain platform for the marine insurance sector is due to be launched in early 2018 following a successful 20-week “proof of concept” exercise. The initiative is a collaboration between A.P. Moller–Maersk, Willis Towers Watson, MS Amlin and XL Catlin with the backing of EY, Microsoft and blockchain developer, Guardtime.
The platform, which is the first of its kind in the insurance industry, aims to reduce paperwork and friction in the process of insuring shipments.
Blockchain, also known as distributed ledger technology (DLT), is a shared, encrypted database that allows users to securely record details of transactions or contracts across a network in real time without the need for central administrators. Blockchain can also process and settle transactions automatically via so-called “smart contracts” using computer algorithms, with no need for third-party verification. This make it possible to automate many stages of a process.
The marine insurance initiative is designed to use blockchain technology to capture data about shipments, risk and exposures, and integrate this information with insurance contracts in a standardised, secure and transparent format. The platform is designed to make auditing aspects of a shipping supply chain easier, to improve tamper-resistance and the sharing of data between clients, brokers, insurers and third parties in real time. It will also enable many different parties to settle upon the terms of premiums in a more timely fashion. The aim is to speed up billing and collection of payments, and improve the clarity of claims histories that are used to inform pricing decisions.
Interest in the potential of DLT has been growing rapidly in the marine sector in recent months. This initiative is significant as it moves the application of that technology from theory to practice. This initiative will therefore be watched closely to see what can be learned and applied to other insurance sectors.
Other insurance groups are also experimenting with the use of blockchain. The Blockchain Insurance Industry Initiative – B3i, which was launched in October 2016 is a collaboration between 15 major re/insurers to explore the ability of blockchain technologies to increase efficiencies in the exchange of data between reinsurance and insurance companies. B3i is due to present its newly developed prototype smart contract management system at the 2017 Monte Carlo RVS conference this week. The blockchain transformation in the insurance industry appears to be gathering pace and is likely to be a significant part of the technological revolution of the industry which is now underway.