With increasing focus on efficient global operating models, wider capital availability and soft markets, there is huge commercial pressure on insurance leaders to change the way they do business. We identified a number of ways in which the distributed and decentralized nature of Blockchain technology can deliver the ground-breaking transformation businesses are looking for.
The game needed changing
The commercial and specialty (re)insurance industry suffers a well recognized and well documented series of operational inefficiency problems that impact not just re/insurers brokers and other parties, including:
- No unequivocal, mutually-agreed, real-time status of business transactions between trading counterparties.
- Inconsistent, conflicting and sometimes just plain incorrect data held by counterparties about their trades.
- Collection and manipulation of information by intermediaries in processes.
- Unnecessarily extended trading transaction timescales and inflated operational costs particularly in the placing and claims cycles where they have the most marked negative impact on serving end customers.
These operational problems do not stem from inefficiencies within each processing organization but rather from the inherent nature of transacting, exchanging and interpreting data across multiple parties via the current industry message interaction models. That single, industry-wide practice is the root cause of the fundamental issues that impact everyone in insurance. No organisation can hope to achieve optimal operational efficiency and deliver maximum value to end customers while this exists. The status quo is actively hurting business.
Blockchain powers the change
ChainThat's Blockchain-based solutions solve these fundamental transactional issues at the root because they provide a robust, common process for the sharing and agreement of trading. It spans placing and negotiating contracts, exchanging technical and financial accounts and agreeing claims.
Single, consistent, immutable views of trading
Our solutions are not hampered by compromises inherent in current messaging models; rather they directly mirror the true business interactions of the insurance world. There is no need for a central system or service provider that manages all data interchange between participants. Each participant holds their own high-quality data and shares it in its native form with their trading counterparties using Blockchain technologies that guarantee that the trades between parties are immutable and with a bullet-proof audit trail. ChainThat's judicious implementation of Blockchain combined with other distributed technologies enables a true peer-to-peer interaction model that simply has not been practically implementable until now.
ChainThat Insurance Blockchain Framework
(CT - IBF)
Internal Processes and Systems – Foundation
Our starting point in designing this framework was to acknowledge that consortia members will all have their own internal processes and systems that typically support the full range of operational business processes from placing, through claims to settlement and business reporting. Our blockchain solutions do not replace or duplicate these organisation specific ways of operating. Instead distributed applications augment them with agreed and optimised collaboration processes between the consortia counter-parties. It is these collaboration processes that are the weak point in the industry and it is these that are the greatest driver of internal inefficiency in each insurance market participant. Removing this source of collaboration inefficiency allows each participant to then optimise their own operating model at their own pace and in their own way.
The Distributed Applications that ChainThat provides and supports on behalf of Consortia members are built upon our Insurance Blockchain Framework. The framework is not simply a ‘blockchain system’ but an architecture that brings together a range of modern technology components. Using a component architecture that allows us to both quickly develop, deploy and change distributed applications for the insurance industry while recognising and allowing individual components to be upgraded as these technologies evolve.
Integration with consortia participants is our starting point. Our framework provides modern APIs that allow ‘once-and-done’ integration with the distributed consortia applications. Access security is a key part of this integration; while participants can access the distributed application and its data by a direct user interface or by direct integration to the distributed application. Both ways of using the application use the same underlying APIs, this gives participants a choice over the pace of transition and integration.
Business Collaboration Services
The Framework’s Business Collaboration Services provide the custom business process facilities to support collaboration, negotiation and agreement activites between participants. Applications in different process areas (e.g. Placement, Claims, Accounting and Settlement) can be supported without needing to create a single monolithic and complex system
The Framework’s ‘Data Layer’ allows both structured data (following ACORD or local industry standards) or semi-structured data such as documents to be shared between participants. The Data Layer also allows easy integration between the different process applications as needed (e.g. between Placement and Accounting and through to Settlement).
The business service and data layers are then supported by a set of decentralised technologies of which Blockchain is one. These foundation technologies provide the new way of constructing shared business systems and securing business data to only those authorised to use it in ways that do not cede control to a central provider or to one or a sub-group of consortia members.
Infrastructure & Hosting
Finally, the framework provides for straightforward deployment and secure management of the distributed application on each participants’ node or nodes whatever their chosen mode of infrastructure hosting provision. The distributed applications are built in a way that means that individual infrastructure costs are far lower than ‘traditional’ business systems.