According to foreign media reports, five European insurance giants—Allianz, Aegon, Munich Re, Swiss Re and Zurich—have jointly formed a new blockchain research consortium, another major blockchain alliance following R3 and Post-Trade.
The five largest European insurers have joined forces to provide a meeting platform for the companies to exchange views and assess whether blockchain technology can help the insurance industry improve efficiency.
Blockchain, the underlying technology of Bitcoin, is essentially a shared encrypted database that allows users to securely record the details of transactions or contracts in multiple places simultaneously. The technology has already seen many pilot applications in banking, but progress in insurance has been slow.
Alessandro Spadoni, project leader at Zurich Insurance, said: "We should be able to offer our customers more efficient and streamlined services. Our first target is the reinsurance business, where we are currently looking at using blockchain smart contracts to simplify the sales and claims handling processes of reinsurance."
Smart contracts are one of the core technologies and applications of blockchain. By encoding terms and conditions into code, they automatically trigger and enforce execution when specific instructions are received. For example, a smart insurance contract can automatically pay a claim under certain circumstances.
In recent years, several consulting and research institutions have shown that the development of blockchain smart contracts can help the insurance industry save significant costs. According to research by an IT services group, in the auto insurance industry insurers can reduce operating and claims processing costs by about 13% by using smart contracts.
But at the same time, Spadoni said: "We have not yet fully proven these advantages. Before putting them into practice, we will cautiously conduct extensive experimental work."
It is reported that the blockchain consortium will publish its first research results before the middle of next year. In addition, they hope to attract more insurers to join. As Alessandro Spadoni put it, "If you want to build an industry-wide chain network, you need everyone to participate and form a network effect."
At present, although blockchain applications in the insurance industry are not yet extensive, there are precedents. For example, Allianz has launched a smart contract pilot for natural catastrophe insurance. In addition, UK software startup Safeshare provides insurance services based on blockchain technology to customers who rent out their own offices.