B3i, the blockchain insurance venture backed by more than twenty insurers and reinsurers, is to shut down. The company was incorporated in Switzerland in 2018, and its funding came entirely from insurance firms. An inability to close a further funding round triggered the insolvency. Its most recently announced funding was a Series B in late 2020 of an undisclosed amount, following a Series A of more than $20 million.
The founding insurers were Zurich, Swiss Re, Generali, Allianz, XL Innovate, SCOR, Aegon Blue Square, MAPFRE and Achmea.
A key question is whether this failure will be attributed to another large consortium, the technology, timing, agility, or something else. Consortia are notoriously hard.
A statement on the website reads, “The directors, following consultation with the shareholders, have collectively concluded that there was not sufficient support to continue with the venture at this stage.”
Meanwhile, one of its shareholders Allianz issued a statement: “While the B3i consortium of 20 insurers will not continue, the collaboration has generated several successful Blockchain applications Allianz now uses. We continue to believe in the potential of Blockchain technology and are looking for ways to further develop it.”
Late last year, B3i announced that it had landed a project to help manage nuclear reinsurance for six European nuclear pools. More recently, it started a collaboration with the U.S. insurance consortium RiskStream for parametric insurance.
Back in 2018, RiskStream and B3i seemed to compete with each other. RiskStream had planned a major outside funding round in 2019, but that didn’t materialize. Instead, RiskStream progressed slowly by getting support from insurers on a project and piecemeal basis. In contrast, B3i landed the funding.
In the early days of enterprise blockchain, insurance was the sector that led. That’s because there are numerous instances where the same insurance data gets replicated between parties such as agents, brokers, insurers, and reinsurers. And every time there’s a mismatch, it involves reconciliation processes which are frequently manual. In theory, blockchain solves that.
Some insurance projects are progressing, including a big insurance broker IMA launching a Certificate of Insurance solution this week and Allianz’s cross border claims solution last year.
It’s not just insurance
Last month, another of the earliest enterprise blockchain startups, we.trade for trade finance, also shut down. It was backed by a dozen big banks and IBM.
As an outsider, both we.trade and B3i had one key marker in common. Within a couple of years of founding, both replaced their leader, who had industry business experience, with a more technical officer. Unlike B3i, we.trade never handed out the CEO job title, giving the impression that the backers of the trade finance firm were in the driver’s seat at the detail level.
We plan to update this story.