Yesterday The Institutes RiskStream Collaborative (formerly RiskBlock) announced a new reinsurance placement project based on blockchain. For the initiative, it’s partnering with the Reinsurance Solutions business of Aon plc and Guy Carpenter, a subsidiary of Marsh & McLennan Companies. These are the two largest reinsurance brokerage companies in the world.
Although Aon is U.K. headquartered, the U.S. is its biggest market. The company is best known for commercial insurance, but reinsurance makes up almost 15% of its business with segment revenue of $1.56 billion in 2018, ten years after acquiring Benfield.
The RiskStream project aims to use ACORD industry standards to enable greater efficiency by reducing friction. A successful Proof of Concept has already been run with RenaissanceRe and Everest Re involving distributing submissions and receiving quotes using distributed ledger technology (DLT). RiskStream has formed a working group with member carriers, brokers and reinsurers.
“There has been tremendous hype around blockchain in our industry, but few results to date,” said Bob Olson, CIO of Aon’s Reinsurance Solutions business. “This is a very practical use case perfectly suited to a blockchain; multiple parties adding data, building upon the last until an agreed contract is formed through consensus. This shared single version of the truth brings immediate efficiency to the process while laying the foundation for further smart contract automation on downstream processes.”
Guy Carpenter is the reinsurance brokerage arm of Marsh & McLennan and accounts for roughly $1.3 billion of its revenues. John Crichton, CIO of Guy Carpenter commented: “We believe an open platform that is supported by industry stakeholders will maximize.”
Three weeks ago Marsh, a sister company to Guy Carpenter, deployed one of the first live insurance blockchains for commercial proof of insurance. It collaborated with ISN which works with the construction and oil extraction industries. ISN helps manage 67,000 contractors in 85 countries, and they need to prove they have insurance cover.
In terms of reinsurance, the other major blockchain consortium B3i started by focusing on reinsurance with an XOL reinsurance contract and is extending its scope in reinsurance and commercial. Four out of five of the world’s top reinsurers are shareholders in B3i. The only one missing is Berkshire Hathaway.
The Blockchain for Insurance conference takes place in London on June 18-19th. Ledger Insights is a media partner.