Blockchain Solutions Launched by European Nuclear Pools
September 9, 2021
The reinsurance industry continues to utilize blockchain technology in new and innovative ways. Six European nuclear pools (from France, Germany, Spain, Sweden/Finland, Switzerland, and the UK) have tapped the Blockchain Insurance Industry Initiative (B3i) to develop solutions based on Distributed Ledger Technologies (DLT) for management of their inter-pool reinsurance contracts.
Because of unique issues presented by coverage for nuclear risks, insurers will “pool” or group their capacity to jointly underwrite such risks. Nuclear pools within a particular market (such as in a particular country) serve as the technical underwriting vehicles for the pooling of the net capacity for these risks.
In announcing this collaboration, B3i noted that “[t]he management of these pools is highly complex, and the international scope of the business, via the inter-pool exchange of risk, means that the insurance transactions are subject to a wide variety of processes and regulatory frameworks.” As a result of these complexities, these nuclear pools are uniquely situated to benefit from DLT-based solutions, which can bring increased contract certainty, process efficiency, and real-time portfolio oversight and management.
B3i and the nuclear pools are developing a DLT-based application expected to have immediate and scalable benefits in the placing and binding of inter-pool reinsurance contracts, and with the medium-term goal of utilizing the application for accounting and claims. B3i notes that “[t]he solution will also be designed to accelerate financial closing and a shared database will give the pools access to a high quality and structured dataset to improve risk analysis and audit/compliance performance.”
B3i anticipates that it will eventually extend this pool risk transfer solution to other domestic insurance pools and other coverage lines, including earthquake insurance.
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