Blockchain technology is amongst the most promising inventions for financial service industry. Moreover, financial services are likely to get transformed by the blockchain technology with the anticipation that around 10 % of the overall GDP is likely to be managed by blockchain platforms in forthcoming years. This paper is made highlighting one of such blockchain technology B3i consortium that is set up by the insurance and reinsurance companies in the United States. B3i which is a blockchain insurance business initiative is an association of insurance as well as reinsurance corporations instigated in 2016 in order to discover the probable use of blockchain and increased efficacy.

What is B3i consortium?

As mentioned before, B3i which is a blockchain insurance business initiative is an association of insurance as well as reinsurance corporations instigated in October 2016. Initially it was composed of only 5 participants that included Allianz, Aegon, Munich Re, Swiss Re & Zurich. Further, 10 more members were added in 2017 including Ageas, Achmea, Hannover Re, Generali, Liberty Mutual, SCOR, RGA, Sompo Japan Nipponkoa Insurance, XL Catlin and Tokio Marine Holdings. In addition, the vision of B3i’s is to cooperatively discover the prospects of blockchain technology wide-ranging usage cases towards improved serving of end-clients.

Initially it was decided to develop a 1st proof-of-concept (PoC) for the Property Cat XL reinsurance treaty management. The Poc was publicized in an insurance summit in Monte Carlo and unlocked for market testing. They were very much assertive about the role of blockchain playing an essential role in the insurance business in the forthcoming years. As per Deloitte journals, blockchain is expected to shape the base of the business’s next-generation set-up. The company will reconsider the methods plus call into inquiry orthodoxies that are essential seeing the business models of these days. Furthermore, Deloitte has already initiated constructing a real venture dedicated for cross-business blockchain outlines along with numerous used cases, both for the property & casualty insurance as well as L&A insurance. For instance, proof of insurance, first notice of loss, subrogation and parametric insurance.

Therefore, Deloitte sponsored a big global insurance company for the development of Poc in the reinsurance industry. The company was amongst the first giant insurance companies that had previously done one PoC with blockchain and was also exploring the technology. In the year 2017, in addition to their contribution in B3i, this big insurance company along with Deloitte decided to work in association with each other to implement a smart agreement platform for a compound reinsurance database, aiming at overall handling processes of the treaty between the reinsurance corporation and the key insurance operating corporations.

In addition, processes of reinsurance are extremely ineffective. Moreover, it is among the most multifaceted business, but still has got several processes that are manually managed. This has been made easy with the help of blockchain technology that offers substantial potential in commencing, treating as well as resolving transactions amongst the prime insurers and reinsurers with the help of its shared ledger that also enables in tracking and tracing every single event & transfers the value without necessitating a key database.

Business objectives for PoC

• Reducing the amount of manual alliance essential for the main insurer, reinsurer as well as retrocessionaires in generating agreements and claims.
• Requires transparency between the main insurer, reinsurer as well as retrocessionaires across the process of agreements and claims
• Simplifying the claim application as well as processing in the real time.
• Assist the computerized processing of reimbursements.
• Discover the capability to interface with the legacy podiums.

Blockchain Technology for Central Insurance Organizations

The technology will probably act as a catalyst of an insightful reformation for insurers, as it will have a big impact over all the steps of the central insurance value chain.

Below are Potential most Relevant Use Cases:

• Public: on the basis of smart Identity, insurers are capable of verifying identity plus enlist fresh customers at a faster speed at a comparatively reduced costs.
• Treaty: By the means of blockchain, all the different parties of a treaty will be benefiting from a combined platform that will cut the errors, costs and the time of the process.
• Claim: The formation plus processing of claims on the basis of smart treaties confirms a clear, responsive and assured process.

Furthermore, proof of concept determines that potentiality of blockchain technology to revolutionize not only the reinsurance industry, but then also the overall financial services segment with these three mechanisms.

Additionally, regardless of the peer-to-peer nature of the structure, validators will still require to verify members and to be arbitrators at times of clashes. Moreover, in a wholesome blockchain ecology, anybody can run the code & turn into a validator, however considering the existing governing framework as well as trust models, the influx of regulated validators under the specialist of current bodies that financial companies’ best represent attributable to their market position.

A noticeable trend is the rising inclination of consumers towards further customized products & services. So blockchain technology along with the Big Data analytics, artificial intelligence and the IoT will be one of the driving forces for imminent innovation. Besides, in a blockchain stimulated insurance ecosphere, major access to consumers as well as risk valuation tools will last to be key source in managing an efficacious business.

Conclusion

The blockchain technology is moving at a rapid pace across the overall insurance market shareholders. The technology is design with the aim of becoming a calculated imperative for big companies. Some of the industry wide associations including B3i & RiskBlock aim at maximizing a probable value of blockchain. The aforementioned blockchain PoC offers strong proof about the effectiveness of the blockchain technology in handling compound and outsized reinsurance treaties.