Blockchain tech comes to marine insurance

BI Intelligence

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Global financial consultancy EY's insurance advisory division has announced that a blockchain technology platform for marine insurance, which it has been developing with blockchain fintech Guardtime since 2016, is now ready for commercial use.

The platform was built on Microsoft's Azure cloud, and has been launched in collaboration with global shipping company Maersk, international insurance industry standards body ACORD, Microsoft, and specialty insurers MS Amlin and XL Catlin, following a 20-week proof-of-concept (POC) phase. EY says the platform's rollout is due to begin sometime in 2018.

The parties are trying to improve processes in a particularly tricky area of insurance. Marine insurance, the insurance of goods being shipped at sea, has historically depended on the shipping of paper contracts from one port to another to be manually signed, says EY. Because of the wide network of parties involved in issuing, transporting, verifying, and signing such contracts, this results in long paper trails vulnerable to tampering and human error, endangering the high-transaction volumes typically involved in marine trade, and reducing transparency, regulatory compliance, and risk assessment for marine insurers and shipping companies.

The new platform is designed to eliminate such inefficiencies using blockchain technology. The platform will connect brokers, insurers, and shippers to a distributed ledger that creates an immutable record of details like the identities of a transaction's stakeholders, as well as risk and exposure data related to a specific shipment. That information is then automatically integrated into an insurance contract also registered on the ledger. The platform keeps track of asset data from many parties, links data from disparate sources to policy contracts, and takes into account developments in real time that could affect a shipment and the pricing of an insurance policy. The solution's developers say this can help its users increase transparency, reduce human error, and limit reconciliation and administration costs.

This blockchain solution may have an easier time achieving a network effect than most. That's because many of this industry's stakeholders are heavily involved in blockchain technology exploration in another area: trade finance. Blockchain technology is already being applied to keep track of goods as they are shipped between continents and parties, so many of the companies tracking their wares will likely also have a strong interest in insuring them more efficiently. As such, when the platform launches, it seems likely to have a primed user base. This illustrates that building on use cases in an industry already familiar with blockchain technology might be an efficient way to boost adoption and create a wide user network.

Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver. 

Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions. 

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on blockchain in banking that:

• Outlines banks' experiments with blockchain technology. 
• Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews. 
• Discusses the likely trends that will emerge in the technology over the next several years.
• Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.

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