Big Insurers Are Uniting Behind R3's Blockchain Tech | Crypto News
R3 has scored another win in the insurance sector, giving the startup a wide lead over other distributed ledger technology (DLT) providers in the sector.
Revealed exclusively to CoinDesk, the RiskBlock Alliance, whose members include such insurance heavyweights as Chubb, Marsh and Liberty Mutual, has decided to build its first set of use cases using R3’s Corda platform.
The news comes soon after B3i, the European reinsurance consortium, decided to switch from Hyperledger Fabric to Corda. With the addition of RiskBlock, R3 now counts all the major insurance blockchain consortia as Corda users, including the Insurwave marine insurance platform created by EY and Maersk as well as regional initiatives in India and Italy.
RiskBlock was officially launched in mid-2017 by The Institutes, an insurance research and education network, but the team behind the DLT consortium has spent at least two years testing enterprise blockchain solutions. Earlier this year, RiskBlock narrowed down its choices to a short list: Quorum (developed by JPMorgan Chase), Hyperledger Fabric, Corda, and Digital Asset.
“We went through an intense and laborious process and finally narrowed it down to two, which were Corda and Digital Asset,” Patrick Schmid, a vice president at RiskBlock, told CoinDesk, adding:
“It was a close race – and we haven’t worked out all the details yet – but we have decided on Corda and we are moving in that direction.”
RiskBlock was a founding member of the Ethereum Enterprise Alliance and much of the early work, including several proofs-of-concept, was done on a private version of ethereum, the world’s second-largest blockchain. However, the insurance consortium started to change course this year as it received input from member firms and also some of its potential partners.
Privacy – or, rather, the lack thereof in a system forked from a public network – was the dealbreaker for these companies, according to Schmid.
“What we learned from testing ethereum was that our members found huge value in the smart contracts, and found huge value in blockchain-enabled technology. But they were a little bit concerned about data segregation,” he said.
“Even with a private variant of ethereum, their concern really was around data being stored, even if it’s encrypted and hashed, on every node in the system.”
The new RiskBlock applications are proofs of insurance (with the goal of weeding out uninsured motorists); more efficient forms of data sharing when a policyholder first notifies an insurer it will be filing a claim; subrogation (think of when your auto insurance carrier pays you after an accident and then pursues the other driver’s carrier for reimbursement), with a focus on blockchain-based net settlement; and parametric insurance, which is paid out automatically when a triggering event such as a natural catastrophe occurs.
In terms of a timeline, Schmid said, “Everything is in progress now. We anticipate that we’ll have POI and First Notice of Loss fully complete and ready for member testing before the end of summer.”
Insurance and interoperability
Landing RiskBlock is another important validation for R3’s technology at a time when the bank-owned startup is rumored to be struggling financially. The company is set to release the commercial version of its enterprise software next week.
“Over the last few months we have seen several insurers migrate to Corda due to its enhanced privacy and scalability; information is shared on a bi-lateral or multi-lateral basis, meaning parties that are not involved in the transaction will not see it,” said Ryan Rugg, global head of insurance at R3.
“Corda gives insurers the ability to integrate and secure disparate data sources, whilst simultaneously ensuring transparency across an interconnected network of clients, brokers, insurers and other third parties,” he added.
In a sense, B3i’s switch from Hyperledger to Corda made fellow insurance consortium RiskBlock more likely to settle on the R3 platform as well, all else equal.
That’s because, according to Schmid, the potential to “make interoperability an immediate thing” was a big factor in the platform selection process at RiskBlock.
“One of the major catalysts for us to narrow our selection process down to ranking Corda at the top was that it’s potentially also going to be leveraged by European reinsurers in the B3i initiative and by the InsurWave initiative – and some other smaller initiatives,” he said.
B3i, founded by insurance giants Allianz, Aegon and Swiss Re, and supported by AIG and AIA, gave similar reasons as RiskBlock in explaining its switch from Hyperledger Fabric to Corda.
“After re-evaluating our criteria around data privacy, developer productivity and interoperability we concluded that Corda is a perfect fit for our insurance use cases and also for our future strategy for an insurance business network,” Markus Tradt, CTO at B3i, told CoinDesk.
Tradt said B3i’s vision goes far beyond single-purpose blockchain deployments for a specific use case and that his consortium is working with partners and third parties for application developments.
Hence, “interoperability is crucial for us,” he said, “To that end, we are actively pursuing collaboration or partnerships with other platforms and initiatives.”
Puzzle pieces image via Shutterstock.