Blockchain keeps on joining the top brains of the industry. International Business Machines (IBM) has announced a new partnership with Insurer American International Group Inc (AIG) to develop a “smart” insurance policy where blockchain is used to manage complex international coverage.
Blockchain has recently got worldwide popularity as a unique technology suitable for recording and keeping track of assets or transactions across all industries.
Traditionally, multinational insurance coverage is too complicated with a maze of international regulations, paperwork, and payment terms.
“There’s a lot of back and forth and it’s all through email chains going around the world, instead of a centralized system,” Carol Barton, President of AIG Multinational, says.
AIG and IBM have already completed a pilot of “smart contract” multi-national policy for Standard Chartered Bank PLC.
Emily Jenner, Head of Insurable Operational Risk at Standard Chartered, said: “As a global bank we have to ensure consistent, trustworthy and secure financial transactions, be that as part of our business or as customers ourselves. By creating a process by which we can arrange multinational insurance contracts through blockchain we not only have transaction security but contract certainty across multiple business locations.”
Standard Chartered Bank leverages blockchain to facilitate sharing of real-time information for a main policy written in the United Kingdom, where the bank is headquartered, and three local policies in the United States, Singapore and Kenya. This also allows visibility into coverage, premium payment at the local and master level, and automated notifications to network participants once the payment is made.
The pilot also showed how third parties including brokers, auditors and other stakeholders can be included in the network.
“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”, Rob Schimek, CEO of Commercial at AIG, said.
IBM unveiled that each territory selected for Standard Chartered’s coverage introduced a level of complexity for blockchain trial. For example, a Kenya regulation known as “cash before cover” requires policyholders to pay for their coverage before it is valid.
Millions of dollars have already been invested in the development of blockchain technology in the hope to make transactions faster, easier and more secure. IBM has a number of partners from different spheres including medical one. The most recent collaboration with Chinese conglomerate Sichuan Hejia resulted in the launch of the Yijian Blockchain Technology Application System, a blockchain-based, supply chain financial services platform for pharmaceutical procurement.