Other parts of this series:
- Blockchain start-ups are training their sights on the insurance industry
- Blockchain could force insurers to radically rethink their businesses
- Major insurers are starting to put blockchain to the test
- Blockchain gains support from technology heavyweights
- Blockchain still needs to clear some big hurdles
Big banks are pioneering the development of blockchain applications. Some major insurers, however, have started testing the potential of this innovative technology.
Blockchain is no longer an esoteric technology on the fringes of the financial services industry. It’s suddenly become a big item on the agendas of insurers across the world.
Blockchain, and allied innovations such as crypto-currencies, distributed ledgers and smart contracts, will enable insurers to substantially cut costs, accelerate transactions, spread risk and grow markets. They are expected to save the financial services industry more than US$20 billion a year by 2021.
While banks are at the forefront of pioneering blockchain applications, some forward-thinking insurers are already testing the potential of this innovative technology.
Allianz recently conducted a successful blockchain pilot project with investment manager Nephila Capital. Its Allianz Risk Transfer subsidiary worked with Nephila to test a smart contract solution for transacting natural catastrophe swaps. Allianz reports that the pilot confirms that smart contracts could significantly accelerate and simplify transaction processing as well as settlement between insurers and investors. Furthermore, it could increase the tradability of catastrophe bonds.
John Hancock has begun working with tech firms ConsenSys and BlockApps to explore the potential of smart contracts in its wealth management business. The insurer’s Lab of Forward Thinking is looking to apply blockchain technology to simplify and enhance the customer experience in John Hancock’s wealth management business.
Chinese insurer Ping An recently joined the R3 international blockchain consortium. R3, which is backed by more than 40 major banks, has conducted several trials that involve the exchange of digital assets over distributed ledgers.
SafeShare and Everledger
Several blockchain start-ups, as I mentioned earlier in this blog series, are starting to target the insurance industry and related sectors. Among the most influential are U.K. firms SafeShare, which provides insurance solutions for the sharing economy, and diamond insurance facilitator Everledger.
In my next blog post, I’ll discuss the response of some major technology providers to the burgeoning interest in blockchain applications.