Employing blockchain technology to ease multinational insurance coverage
American International Group (AIG), Standard Chartered Bank and IBM have piloted a multinational “smart contract”-based insurance policy using blockchain, a distributed ledger technology, according to news release from AIG.
The pilot solution, built by IBM, is said to enable AIG and Standard Chartered to execute multinational coverage more efficiently and to create trust and transparency in the underwriting process.
The three companies worked together to convert a multinational, controlled master policy written in the United Kingdom and three local policies in the United States, Singapore and Kenya into a smart contract that offers a shared view of policy data and documentation in real time. It also provides visibility into coverage and premium payment at the local and master level as well as automated notifications to network participants following payment events.
Rob Schimek, CEO of Commercial at AIG, says, “Our pilot proves blockchain has a powerful role to play in the future of insurance. Any technology, including blockchain, that can increase trust and transparency for an industry whose pillars are built on that, should be fully explored. We’re excited to be delivering innovation that matters to our clients—and co-developing key components of this new technology together.”
The three parties carried out the pilot in a complicated area of commercial insurance—multinational risk transfer—to better understand blockchain’s potential to reduce friction and increase trust in other areas of the insurance value chain, according to AIG.
According to the news release, Blockchain provides a single view across all participants while simultaneously giving selective visibility to participants based on their credentials. It offers the ability to record and track events and associated payments in each country related to the insurance policy. No one party can modify, delete or even append any record without the consensus from others on the network. The level of transparency is said to help reduce fraud and errors, as well as the need for the parties to contact each other to view policy and payment data and the status of policies.