American International Group (AIG), IBM, Standard Chartered Bank have successfully piloted what they say is the first multinational, smart contract based insurance policy using blockchain distributed ledger technology.
By creating a newer level of trust and transparency in the underwriting process, the blockchain solution is claimed to help AIG and Standard Chartered to execute multinational coverage in a better way.
Built by IBM, the pilot solution is based on Hyperledger Fabric, a blockchain framework. It is one of the Hyperledger projects that were hosted by The Linux Foundation.
The pilot was developed to simplify the otherwise complex task of coordinating management and placement of multiple insurance policies across various countries.
It was executed in multinational risk transfer which is considered to be one of the most complicated areas of commercial insurance. This, AIG said was to understand the potential of the blockchain better in the role it plays in reducing friction and increasing trust in other areas of the insurance value chain.
Partnering with Standard Chartered and IBM, AIG converted a multinational, controlled master policy written in the UK, and three local policies in the US, Kenya and Singapore, into a “smart contract” that gives a shared view of policy data and documentation in real-time.
AIG Commercial CEO Rob Schimek said: “Our pilot proves blockchain has a powerful role to play in the future of insurance. Any technology, including blockchain, that can increase trust and transparency for an industry whose pillars are built on that, should be fully explored.
“We’re excited to be delivering innovation that matters to our clients – and co-developing key components of this new technology together.”
The pilot solution as per AIG allows for visibility at the local and master level into coverage and premium payment. Besides, it allows for automated notifications to network participants after payment events.
AIG added that the pilot showed that third parties like brokers, auditors and other stakeholders in the network can also get a customized view of policy and payment data and documentation.
Image: The AIG Towers of Los Angeles. Photo: courtesy of HanSangYoon and Wikipedia.