Xceedance decided to jump on the blockchain bandwagon late last year – but rather than building its own platform, it invested in ChainThat, a specialist provider of blockchain solutions for the insurance and reinsurance industry. ChainThat made a similar move in May 2018 when it formed a strategic partnership with Send Technology, a specialist provider of integration and data transformation, which aims to make it easier for insurers and reinsurers to adopt blockchain and distributed ledger technologies.
When the technology is in the early stages of development, it’s often better to invest or form partnerships with companies that have a particular technological specialty, affirmed executives with Xceedance and ChainThat.
“We are always on the lookout for industry-defining technological changes as well as changes in the market, which really could create a more efficient operating model,” said Arun Balakrishnan, chief executive officer at Xceedance, the Boston-based provider of insurance consulting, managed services, technology and data sciences.
“While the blockchain technology is still in its early stages of adoption, we think it has the potential to greatly improve market efficiencies in the policy serving side or the claims area,” he said.
Blockchains, also known as mutual distributed ledgers, are defined as a common set of records of transactions, which are mutual (shared), can’t be changed and are stored in multiple locations with no central ownership. The technology is being touted as a solution to the industry’s process inefficiencies.
However, Xceedance had to decide whether to build a team in-house. Alternatively, Balakrishnan said, the company could look for partnership opportunities where a highly experienced team of blockchain specialists already exists.
“Rather than reinventing the wheel, we felt it was better to back them, thereby creating significant benefits for both companies,” he said, noting that Xceedance’s scale and expertise will help accelerate the growth of ChainThat, while Xceedance’s clients will benefit from ChainThat’s blockchain developments.
Using a proprietary insurance blockchain framework, ChainThat supports insurance and reinsurance contract management and transactional processes in the insurance lifecycle, including claims, accounting and settlement and billing and collections.
Since its inception in 2015,ChainThat has been focused on using blockchain smart contracts to revolutionize the commercial and professional reinsurance markets. “We’ve done lots of work on proof of concepts with various insurers and reinsurers, and we’ve built various products based on the blockchain framework,” said David Edwards, chief executive officer of ChainThat, based in Richmond, England.
He described a reinsurance smart contract solution, which ChainThat created for a client in the London subscription market.
The solution provides contract negotiation and binding, as well as agreed terms and conditions. Encrypted smart contracts include legal conditions such as triggers, the accumulation of loss events, what lines are covered, excluded risks and policy limits. In addition, he said, it provides the technical and financial accounting, where premium payments are made for multiple contracts on the required dates, while the claims agreement process is handled as well.
“We’ve also got solutions around facilities – such as consortiums involved in a particular line of business,” he said, explaining that it is important to get lots of participants within the market to join in a reinsurance solution to build critical mass.
This is one reason ChainThat decided to build scale with its recently announced partnership with Send Technology, a London-based specialist in internal system integration for blockchain technologies. The industry will only benefit when mini-industry consortiums or major industry consortiums with multiple users begin to share the efficiencies of distributed ledger technology, Edwards noted.
Send Technology’s platform provides the link between existing legacy systems and the blockchain “without the need for the normal, large change and configuration management projects usually required when systems are integrated,” he added. “The idea is that this technology does all the configuration work for integrating the systems.”
As a result, this will help a company that wants to be a member of an industry consortium to connect into the blockchain with greater ease, he said. “We’re not replacing the internal systems – in effect the blockchain is becoming the coordination platform between the various parties in a consortium.”
He cited the example of standard policy administration systems, used to communicate and share data with other companies’ policy admin systems, via email or other messaging systems. If they connect to the blockchain via Send Technology’s platform, they can continue to use existing messaging systems, but that data also is entered into the blockchain, he said. “So when they’re ready to start using the blockchain, it’s there and available.”
The technology allows companies on the blockchain to communicate in the same way with companies that aren’t on the blockchain, Edwards said.
Within any organization, data is spread across a number of disparate systems, said Ben Huckel, chief executive officer at Send Technology. “What we’re interested in is making sure that all those systems have the right information at the right time.”
This technology enables a company to transition fully to blockchain solutions, while avoiding shortcuts or the need to embark in major change projects, he added. “It allows us to lower the barrier to adoption.”
This article first appeared in Insurance Journal’s sister publication, Carrier Management.
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