Insurance giant American International Group (AIG) and UK global bank Standard Chartered have completed a blockchain pilot designed to simplify some of the industry's most complicated insurance policies.
Built by IBM using the open-source Hyperledger Fabric protocol, the pilot revealed today tested a commercial insurance master policy written out of London and applied to local policies in the US, Kenya and Singapore.
By moving the policy from the traditional system where each counterparty would hold its own records to a self-executing smart contract written on the Fabric blockchain, the pilot reportedly showed how real-time visibility into the insurance coverage could allow recipients to be automatically notified following an insurable event.
Rob Schimek, CEO of Commercial at AIG, said in a statement:
"Our pilot proves blockchain has a powerful role to play in the future of insurance."
The multinational commercial insurance risk transfer was also notable for granting additional stakeholders (including brokers and auditors) credentials designed to show them only what they needed for their individual roles in the coverage plan.
According to the statement, the pilot recorded and tracked events that could trigger the payment of a policy, while ensuring that no single party was able to change the terms of coverage "without the consensus from others on the network".
The pilot jurisdictions were selected because they each represented different traits of a potential market. Specifically, the US market was selected for its size and complexity; Singapore was identified as a possible growth market for Standard Chartered; and Kenya was chosen for its unusual regulatory requirements around dispersals.
While London-based Standard Chartered has long been a leader in the blockchain sector, most recently announcing plans to launch a cross border payments platform powered by blockchain, this is one of AIG’s first public forays into the industry.
Over the past few months, insurance has become a heated space for blockchain innovation, with three new firms joining the blockchain insurance consortium B3i and Shanghai Insurance Exchange and nine other partners completing a test focused on this application.
Ultimately, project participants were optimistic about the test and what it hints at for this blockchain use case going forward.
The general manager of IBM Blockchain, Marie Wieck, said in a statement:
"There is tremendous opportunity to apply advancements in blockchain technology to transform the insurance industry."
AIG image via Flickr