Why Insurers Caught the Blockchain Bug in 2015
Professor Michael Mainelli is executive chairman of Z/Yen Group and principal advisor to Long Finance. His latest book, The Price of Fish: A New Approach to Wicked Economics and Better Decisions, written with Ian Harris, won the 2012 Independent Publisher Book Awards Finance, Investment & Economics Gold Prize. In this special feature, Mainelli explores how distributed ledgers and blockchains could fully modernise an industry that still relies heavily on paper. In April 2015, Lloyd's of London launched the Target Operating Model (TOM) project. TOM is a central body responsible for....
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A blockchain technology consortium spearheaded by a global group of insurers has added several new members. The B3i project – short for the Blockchain Insurance Industry Initiative – was launched in October, an effort aimed at providing a way for insurers like Allianz and Swiss Re, among others, to swap information and collaboratively test prototypes and use cases. While some insurers have been testing blockchain independently, B3i offered the chance to conduct those experiments under one roof. Since launch, other insurers, including Liberty Mutual, Sompo Japan Nipponkoa and the....
Germany-based insurance giant Allianz has reported it has successfully used blockchain-based smart contracts to handle catastrophe swaps and bonds, adding that the technology could boost marketability of the financial instruments. "Cat swaps" and bonds are tradable instruments that allow insurers to guard against huge potential losses following a major catastrophe, and which are triggered under predefined parameters. However, the payments between insurers and investors can drag on for weeks or months after a disaster. Automating the process via smart contract technology, though,....
PricewaterhouseCoopers (PwC), the largest professional services firm in the world, is set to initiate research into blockchain tech by focusing on its potential uses in wholesale insurance. PwC to Test Insurance on the Blockchain. The research will be a collaborative project between PwC and Z/Yen, a consultancy think-tank located in the City of London.....
Diamonds have an unlikely new best friend - the blockchain. London startup Everledger is using the technology behind bitcoin to tackle the industry's expensive fraud and theft problem. Or as CEO Leanne Kemp describes it, "putting bling on the blockchain". According to a 2012 study from the Association of British Insurers, around 65% of fraudulent claims go undetected, at an expense of £2bn to insurance companies annually. Diamonds play a key part in this, Kemp said: "Insurers will meet at a conference once a year and say 'By the way, did you see our diamond fraud has gone through the roof....
An advisory council to the US Treasury Department met last week in Washington, DC, to discuss the application of blockchains in the insurance market. While the discussion itself was relatively brief (taking place in the middle of a nearly three-hour meeting), it did offer a window into the perspective being taken by some of the stakeholders on the council, as well as the government department itself. Matt Higginson, an associate partner for management consulting firm McKinsey, led a presentation at the hearing during which he offered an expansive view of the technology as well as a....