Allianz Develops Blockchain Prototype for Captive Insurance Program

November 7, 2017

Allianz Global Corporate & Specialty SE (AGCS) has successfully trialed blockchain technology for a global captive insurance program, which facilitates cash transfers between countries.

AGCS’s Allianz Risk Transfer (ART) business has teamed up with EY (Ernst & Young) as blockchain advisory service provider and digital agency Ginetta to successfully create a blockchain prototype solution for the captive insurance program of a long-standing ART customer with global risks. (A demo video can be viewed via Allianz’ website.)

In connection with this prototype, ART also joined forces with Citi Treasury and Trade Solutions which provided the payment processing services for Allianz’ blockchain prototype.

The results prove that blockchain technology can greatly improve the efficiency of corporate insurance transactions internationally, said AGCS in a statement.

The Allianz captive insurance blockchain prototype, built on the blockchain framework Hyperledger Fabric 1.0, focuses on two types of insurance policies – professional indemnity and property – for a captive insurance program with local subsidiaries in the U.S., China and Switzerland.

AGCS explained the prototype looks at three common process flows in the captive insurance cycle: annual policy renewals, premium payments and claims submission and settlement.

The blockchain technology automatically connects all parties involved in the captive insurance program – the captive management, local subsidiaries and AGCS as the fronting insurer.

Via distributed ledger technology, transactions and data entries are shared among participants in real-time, which decreases the time from start to policy, policy to premium and claim to settlement, AGCS said.

“This creates a much faster, transparent, secure and efficient means of distributing information, conducting business processing and recording transactions across multiple parties,” AGCS continued.

“We are currently seeing many blockchain applications in the financial services industry, and we are eager to explore the potential of this exciting technology in the corporate insurance segment,” explained AGCS Board Member Hartmut Mai. “The captive blockchain prototype is one further example of our commitment to leverage new technologies and drive innovation in insurance.”

As a fronting insurer, Allianz partners with the captive owner to administer each program, using the insurer’s international network in 210 countries and territories to fully comply with local regulations.

“Our captive insurance blockchain prototype demonstrates that regular transactions and cash transfer between fronting insurers and clients can be significantly accelerated and simplified”, says Yann Krattiger, principal at ART. “Automated processing replaces the exchange of thousands of emails and massive data files. Each process is transparent and can be tracked in real-time. Our customers benefit from increased speed, reliability and auditability.”

“The captive insurance blockchain prototype is a prime example of EY’s approach on co-innovating with our clients,” said EY Project Manager Isabella Brom.

“It allowed us to demonstrate and trial the power of distribution and decentralization in the transformation of the insurance industry, using the Hyperledger Fabric Composer toolset to achieve fast and flexible prototype results,” she continued. “The project deepened our and our client’s understanding of how applied blockchain technology will not only fundamentally change insurance as we know it but also create new business models.”

Money Transfer

To process payments related to Allianz’s blockchain solution, Citi Treasury and Trade Solutions leveraged its CitiConnect® Application Program Interface (API) solution to accept payment instructions from Allianz’s captive insurance blockchain prototype.

This connection allows Allianz to communicate directly with Citi, beginning with U.S. dollars and eventually extending into more markets within Citi’s global network.

“Citi is very proud to have been able to help Allianz achieve this industry milestone. By leveraging innovative, new technologies such as Allianz’s blockchain protoype and CitiConnect API, we are able to partner to design new business models and rapidly implement them in a matter of weeks,” said Tapodyuti Bose, global head of Channel, Enterprise and Account Services, Citi Treasury and Trade Solutions.

User Interface

The digital agency Ginetta designed the intuitive, convenient user interface that incorporates the requirements of ART and its captive client. It visualizes core processes, and through real-time information allows tracking their progress by all relevant stakeholders around the world.

Before creating the user interface, all processes of captive insurance management have been reviewed, redefined and radically simplified, explained AGCS.

“With blockchain much focus is put on the technology, yet, in reality, perhaps 10 percent of the work is related to technology,” said Alan Cabello, project lead and innovation manager, AGCS Central and Eastern Europe. :The other 90 percent is rethinking the underlying processes and these in the end are all about people.”

AGCS said it has already successfully tested blockchain technology, when it partnered last year with Nephila Capital Ltd. to transact a natural catastrophe swap.

In addition, Allianz SE is part of the B3i initiative, the Blockchain Insurance Industry Initiative, which recently launched a reinsurance blockchain prototype.

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