Tim Roughton of Pinsent Masons, the law firm behind Out-Law.com, was commenting on the commercial launch of 'Insurwave', a joint venture between EY and blockchain company Guardtime, with support from a number of insurance industry participants. Insurwave will support more than half a million automated ledger transactions and help manage risk for more than 1,000 commercial vessels in its first year, the companies said.
The product is built on Microsoft Azure infrastructure and ACORD data standards. It will allow participants to connect with each other in a secure, private network, and will carry out, track and record transactions leaving an accurate audit trail which cannot be modified.
The participants intend to expand the platform to cover other types of business insurance in due course and envisage marine cargo, global logistics, aviation and energy uses.
Chief information officer Martin Henley of XL Catlin, one of the participants in the Insurwave project, said that the product brought together "all the parties of the insurance value chain on a single platform" for the first time.
"Ultimately, through the use of [connected vessels] and smart contracts, policies will be updated automatically to reflect the risks covered; and this combination of technologies will help improve efficiency in claims assessment and payment," he said. "Those are tangible wins for our clients, no matter their industry. And with the platform going live, we are now ready to start working on opening it up to other insurance segments."
Blockchain allows insurers to share data and documentation with each other and provide payment notifications. The data is stored in 'blocks', and 'chains' join these blocks together to form a cohesive, unbroken and immutable record of information. All members of the network are able to access the entire history of all transactions via the blockchain.
In a discussion paper published last year by Pinsent Masons and Applied Blockchain, Roughton explained that blockchain-based insurance contracts had the potential to provide many practical benefits for the customer experience.
"As I said in my discussion paper last year, blockchain and smart contracts 'can offer real benefits to the insurance industry: they can simplify and automate processes, increase standardisation, offer electronic execution, provide immediate integration of contracts into data pools and self-execute'," Roughton said.
"This Insurwave plaform features all of those benefits and it shows the insurance industry is moving blockchain and distributed ledge technology from hype into reality. It is also a good example of the insurance supply chain collaborating to produce a permissioned distributed ledger to connect a wide range of participants in the supply chain. In my view most of the successful blockchain applications will follow this collaboration model," he said.