UK-based Standard Chartered and the US insurance company American International Group have today announced the conclusion of successful tests of a multinational blockchain pilot, as part of a move that looks to radically simplify the handling of complex insurance policies.
Developed on the open source Hyperledger Fabric protocol with help from IBM, the pilot saw a master policy created in London, before being reflected into local policies worldwide, including in Singapore, Kenya and the US.
As opposed to the traditional process where each party to insurance agreements would retain their own physical records, the system deploys smart contracts for real-time updating and maintenance of insurance coverage.
The pilot is one of the first of its kind to project complex insurance terms over the blockchain via smart contracts, and its successful tests could help solve some of the most pressing problems currently experienced by companies insuring across borders.
Marie Wieck, from IBM blockchain, said their work on this system could have a significant future impact on the wider insurance industry.
“By helping solve some of the biggest problems challenging the [insurance] industry, from eliminating silos of information to improving efficiency, blockchain can truly make an enormous impact and even lead to new business models.”
Carol Barton, AIG’s head of multinational insurance, was also quick to highlight the benefits of the blockchain policy.
“Typically, a multinational policy can take a lot of time because of local regulatory requirements. This system provides a lot of certainty more quickly.”
The pilot trial was able to record policy triggering events, while locking in the terms of coverage unless a consensus across the network had been reached for any variation.
By testing across three very different regulatory environments, the blockchain trial demonstrated the capability of using smart contracts within this sector, and will be closely monitored by others within and developing for the insurance industry.
The move comes at a time where insurance companies across the board are pushing for more significant development of blockchain solutions.
Swiss Re, Zurich, Munich Re, Allianz and others have all made their own in-roads into the technology, which some analysts conclude is set to shape the future of the global insurance industry.