How is blockchain technology being implemented in insurance?

Many insurtech companies are already experimenting with radical new products for the ever-evolving demands of the Insurance customer in the digital age. But blockchain isn’t just for insurtechs; incumbent insurers, as well as reinsurers, are leveraging the technology to improve outcomes for both customer and carrier.

 

For example, Accenture helped Zurich Benelux leverage a blockchain-based system to reimagine how surety bonds are executed. Surety bonds are often used in construction projects. These three-party agreements are designed to guarantee performance or more general fulfilment of an obligation in a business transaction. According to Finaccord, the total value of gross written premiums and commissions for insurance-backed surety bonds across Europe is projected to reach €3.26 billion by 2019.

 

The blockchain-based system integrates with Zurich Benelux’s existing surety-management back-end. A new user interface improves transparency with a one-stop digital hub for customers to manage and track their surety bonds, get detailed bond history records, complete new bond requests and view bond forecasts.

 

Tokio Marine, a Japanese P&C insurer, tested blockchain for marine cargo insurance certificates. It reportedly reduced the time it took for a shipper to receive an insurance certificate by 85 percent.

 

Or consider how Allianz used blockchain and smart contracts to remove friction from a complex process. Catastrophe (cat) swaps and bonds are used to transfer specific risks, typically natural disaster risks, from an insurer to investors. Allianz successfully piloted the use of blockchain and smart contracts to accelerate the contract management process for cat swaps and bonds.

 

Insurers can unlock trapped value by combining blockchain with other technologies, too. Accenture has developed a blockchain-based proof of concept that leverages data from smart sensors to enable smart-vineyard insurance.