Today at a press conference in China, China Re, Hannover Re, GenRe, and Zhong An unveiled a Reinsurance Blockchain Whitepaper. More importantly, the group also announced plans to create a joint reinsurance blockchain platform.
Apart from the efficiency benefits of blockchain, they outlined two reasons for the development. Firstly, the insurers have complete information, but the reinsurer has very limited data about transactions. Secondly, the limited transactional data available to reinsurers results in operational risk for them.
The net effect is reinsurers lack confidence in the information they have, hence they charge more. As a result, this limits the take up of reinsurance in China.
By using a blockchain, reinsurers can gain visibility into the insurers’ transactions.
Proof of Concept
China Re Group and ZhongAn Technology have completed a proof of concept (PoC) with other partners already. This helped them verify the feasibility and benefits of a blockchain reinsurance platform. The PoC sounded unusually wide-ranging, covering negotiation and contracting, reinsurance, document exchange, claims processing, and integration into a multi-chain trading ecosystem. The Shanghai Insurance Regulatory Authority led the project,
Zhong An Technology is the tech subsidiary of Zhong An Online which is a direct insurance startup with a market capitalization of almost $10 billion. Presumably, the fast-expanding insurer is keen to cover more of its downside with reinsurance. Zhong An Online already writes all its transactions to a blockchain, and the company has sold more than 7 billion policies.
Amongst the reinsurers, Hannover Re is also a founding shareholder in B3i.