Insurance broking and risk management specialist Marsh is collaborating with IBM on what it says is the first commercial blockchain solution for proof of insurance.
The service is built on the open source Hyperledger Fabric framework and IBM’s Blockchain Platform.
Marsh aims to use the distributed ledger technology to make the certificate of insurance process “more streamlined and transparent”, allowing clients to speed up functions such as hiring contractors and transferring risk while increasing certainty about insurance cover.
Marsh believes that, as a distributed ledger system, blockchain is ideally suited to a large network of partners. By establishing a shared, immutable record of all transactions that take place within the network, members can access trusted data in real-time, said the company.
Since proof of insurance is an essential business requirement in many industries, the new blockchain solution “opens the door to creating a network of networks to provide verification on a much broader scale”, it added.
“Marsh sees great opportunity in leveraging blockchain technology to better serve our clients by maximising efficiency and creating new opportunities in the insurance value chain,” said Sastry Durvasula, chief digital, data, and analytics officer, Marsh.
“Vastly simplifying the process for providing proof of insurance is a key enabler of business,” added Sandip Patel, general manager for the insurance industry, IBM.
“IBM is committed to connecting emerging blockchain networks to facilitate the next-generation economy. This is an ideal example of how blockchain can be used on a much broader scale to drive real business results.”
Marsh and IBM are developing the solution with input from the Association for Cooperative Operations Research and Development (ACORD), the global standards body for the insurance and related financial services industries.
Bill Pieroni, president and CEO of ACORD, said: “This blockchain solution is key to evolving standards, enhancing data leverage, and enabling state-of-the-market technology to better integrate ACORD members and foster innovation.”
The new network is expected to go live later this year. ISN, the contractor information management provider, is currently piloting the system and coordinating customer feedback.
“The insurance industry has been dependent on paper certificates of insurance, manually populated by an insurance agent,” said Brett Parker, technical insurance lead, ISN. “By digitising the policy information, we can streamline the process, saving our customers time to focus on their core competencies.”
PwC recently published a report on blockchain in the insurance and financial sectors. It found that 56 percent of the firms surveyed said they recognised the importance of blockchain, but 57 percent said that they didn’t know how to respond to the technology. Insurers are less likely to be familiar with blockchain technologies and their applications, added PwC.
As a distributed, mutually assured ledger system, blockchain has been described as a transparent and secure technology, but also as replacing trust with complexity. Accordingly, PwC provided a checklist to help insurance and financial services providers decide if blockchain was the appropriate technology for their needs.
- Multiple parties share data – multiple participants need views of common information.
- Multiple parties update data – multiple participants take actions that need to be recorded and change the data.
- Requirement for verification – participants need to trust that the actions that are recorded are valid.
- Intermediaries add cost and complexity – removal of ‘central authority’ record keeper intermediaries have the potential to reduce cost (eg fees) and complexity (eg multiple reconciliations).
- Interactions are time sensitive – reducing delay has business benefit (eg reduced settlement risk, enhanced liquidity).
- Transaction interaction – transactions created by different participants depend on each other.
If potential customers can answer ‘yes’ to at least four out of the six points, then blockchain could be the right solution, said PwC.
Internet of Business says
2018 has been a fascinating year for blockchain technologies, with a range of new alliances and projects pushing the technology forward, while even some blockchain experts have been cautious about the claims made for the technology.
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