Annuities and life insurance service provider, SE2, has partnered with Digital Asset to use blockchain in the life insurance and annuities sector. SE2 has $100 billion in assets under administration and is the number one administrator of variable annuities in the United States. The company is owned by Eldridge, one of Digital Asset’s investors.
The entire insurance sector represents a classic use case for distributed ledger technology (DLT) where several parties touch a single policy, such as the client, the agent, the insurer, and the reinsurer. As a result inconsistencies in data between organizations is common. Many organizations still email policies and spreadsheets back and forth between parties which is enormously inefficient. That’s especially the case between carriers and reinsurers.
Hence there’s the holy grail concept of a golden insurance policy or annuity record with which all parties interact. SE2 plans to use blockchain for that single source of truth and risk transfer to reinsurers. Digital Asset’s DAML smart contract language is designed to streamline workflows.
“By moving beyond automation of the current process and into distributed ledger technology, SE2 is focused on driving efficiency and scale across the life and annuity industry,” said Mark Schultis, CEO of SE2.
Digital Asset is better known for its capital markets activities but is involved in insurance, including a relationship with Tech Mahindra.
Blockchain for insurance: so much potential
Back in 2018, when enterprise blockchain was in its hype phase, insurance seemed to be the business sector most likely to embrace the technology. While there’s no question about the need for efficiencies, and there’s undoubtedly been some progress, it’s been less than the promise of four years ago.
SE2 has an advantage as a service provider, without the need to wrangle a consortium.
This year Allianz launched a pan-European blockchain claims solution in 23 countries. KPMG and Digital Asset partner IntellectEU unveiled a solution to combat fraudulent insurance claims. And one of the big insurance consortia, B3i, unveiled a solution to enable eight marine insurance firms to transfer risks amongst themselves. It landed a similar deal for the nuclear sector.
Meanwhile, insurtech startup Nayms is trying to become the Lloyds of decentralized finance using the public Ethereum blockchain. While it doesn’t use enterprise blockchain, Nayms targets the regulated insurance market in Bermuda, with AON as a participant in the pilot.