Thai Re "Insurer Network" Just Latest Example of Blockchain Innovation in Reinsurance
January 12, 2021
Last week, IBM and Thai Reinsurance Public Company Limited (Thai Re) announced the launch of “Insurer Network,” described as a reinsurance smart contract production network using IBM blockchain technology on IBM Cloud. The platform is intended to increase efficiency and speed in processing reinsurance contracts, while also reducing forgery risk and the potential for data inaccuracies that could result from manual processing.
For several years now, the insurance and reinsurance industry has recognized the importance of blockchain, and its potential implications for cost savings, transparency, efficiency, accuracy, and to fraud reduction. Generally, speaking, blockchain is a form of digital ledger technology that is essentially a shared database that permits digital information to be shared but not altered. New information can be written onto the ledger, but previously entered information, stored in “blocks,” cannot be modified. This greater immutability lends itself to a variety of applications beyond the Bitcoin cryptocurrency for which blockchain was originally devised. Indeed, PricewaterhouseCoopers believes blockchain presents a $5 billion savings opportunity for reinsurers. The industry has now moved beyond mere recognition and discussion of blockchain advantages into actual implementation and use of that technology.
The Thai Re launch last week is the latest in a number of industry efforts to utilize blockchain technology. The Blockchain Insurance Industry Initiative (B3i) began in October 2016 as an international industry blockchain technology consortium, and is currently owned by 21 major insurers and a diverse community comprising over 40 companies. Last year, B3i Services AG (an independent company formed by B3i) announced that 30 reinsurance contract placements were concluded on its platform, including complex catastrophe excess of loss (Cat XoL) reinsurance treaties. The company has since announced enhancements to its digital solution to allow it to support not only placement, but also the electronic administration of Cat XoL treaties. Updates in 2021 are expected to add claims management functionality and extend the platform to additional reinsurance types and lines of business. The ultimate goal is enabling the “end-to-end management” of reinsurance contracts through blockchain technology.
Similarly, RGAX, a subsidiary of Reinsurance Group of America, Incorporated, announced in October 2019 that it completed a proof of concept with Mutual of Omaha, which “explor[ed] reinsurance workflows on a distributed ledger (a.k.a. permissioned blockchain).” That project used test data to explore “the automation of reinsurance transactions using distributed ledger and smart contract technology.”
Watch this space, as 2021 is certain to bring more news on the blockchain front. Crowell & Moring stands ready to help clients understand the most promising uses of blockchain, whether they are developers and vendors seeking to capture new opportunities, or companies and end users that are considering joining or deploying blockchain networks.
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