RGAX, the innovation unit of Reinsurance Group of America, said it completed a blockchain proof of concept (PoC) for reinsurance with Mutual of Omaha. The two used test data to trial the automation of reinsurance transactions using distributed ledger technology (DLT) and smart contracts.
When an insurance carrier shares some of its risk with reinsurers, splitting monthly premiums involves considerable administration and reconciliation.
RGAX is using blockchain to streamline reinsurance transactions such as premium calculations, payouts and reconciliation between the parties involved.
“With this technology (DLT), we hope to modernize data transfer across the industry by automating repetitive manual tasks, reducing administration effort, and better structuring data,” said Mitch Ocampo, Chair of the RGAX Distributed Ledger Team.
In the PoC, Mutual of Omaha acted as the insurer ceding the risk to the reinsurer. It processed the monthly premium transactions based on a reinsurance contract. Premium payouts were triggered giving each party its share. Because there’s a common record to which the parties have access, reconciliation between the DLT and internal systems should be capable of automation.
“Although this technology is still in its early stages, there are clear opportunities for innovation, some of which may radically change the way the insurance industry conducts business,” said James Davenport, Senior Vice President of Finance at Mutual of Omaha.
Meanwhile, PricewaterhouseCoopers (PwC) calls blockchain a $5 billion opportunity for reinsurers. The B3i consortium’s first project is a reinsurance contract for Excess of Loss (XOL).
A few months ago The Institutes RiskStream Collaborative (formerly RiskBlock) launched a blockchain reinsurance project in collaboration with the two biggest reinsurance brokers, Aon and Guy Carpenter.
And in China, a group of reinsurers announced plans to create a reinsurance blockchain platform.
