IBM and insurance giant AIG are partnering to test a blockchain-based insurance policy using smart contracts. Its first job is a multi-national policy for Standard Chartered Bank PLC.
The Standard Chartered policy works by sharing real-time information between the main policy at its U.K. headquarters, and three other local policies in the U.S., Singapore and Kenya.
Traditionally, multinational companies have had issues where insurance policies are issued in one country, but affiliates who also need coverage are based in others. The rules governing insurance coverage, as well as documentation and payment terms, can vary greatly.
A distributed, real-time alternative allows the various international components to share all data and documents, as well as information on payments. Standard Chartered chose its four locations deliberately to test its effectiveness at handling complex differences between the jurisdictions.
Based on IBM’s Hyperledger Fabric
The pilot project will be based on IBM’s Hyperledger Fabric — one of the wider Hyperledger project’s five main frameworks. Fabric is a smart contract engine for modular applications, with components like consensus and membership services. Its smart contracts are hosted in containers called “chaincode”.
Marie Wieck, general manager IBM Blockchain, said blockchain technology could “transform” the insurance industry:
“By helping solve some of the biggest problems challenging the industry from eliminating silos of information to improving efficiency, Blockchain can truly make an enormous impact and even lead to new business models.”
IBM, together with Blythe Masters’ Digital Asset Holdings, built the Hyperledger Fabric platform for the first Hyperledger hackathon. Hyperledger itself is a Linux Foundation project.
According to Nasdaq, it also plans to leverage its Watson artificial intelligence (A.I.) technology to add selected internet-of-things (IoT) data to private blockchains. Watson can filter the data to send only relevant information to the blockchain, while the blockchain itself keeps the data tamper-proof.
Race to Blockchain All the Insurance Things
There’s currently a race on to deliver blockchain and smart contract services to the insurance industry. Participants believe the effect will be transformative, opening lucrative new business opportunities.
Today, Bitfury also announced a partnership with Risk Cooperative to build a blockchain-based risk determination model, which they believe will address currently underserved insurance markets.
Will IBM dominate the blockchain industry of the future? Let’s hear your thoughts below.
Images via Pixabay, IBM, Standard Chartered