American International Group Inc. (NYSE: AIG), IBM (NYSE: IBM)
and Standard Chartered Bank plc announced they have successfully
piloted the first multinational, “smart contract” based insurance
policy using blockchain, a distributed ledger technology.
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The blockchain solution creates a new level of trust and
transparency in the underwriting process, enabling AIG and Standard
Chartered to execute multinational coverage more efficiently.
Coordinating management and placement of multiple insurance
policies across multiple countries is highly complex. The pilot
solution was built by IBM and is based on Hyperledger Fabric – a
blockchain framework and one of the Hyperledger projects hosted by
The Linux Foundation.
Working together, AIG, Standard Chartered and IBM converted a
multinational, controlled master policy written in the UK, and
three local policies in the US, Singapore and Kenya, into a “smart
contract” that provides a shared view of policy data and
documentation in real-time. This also allows visibility into
coverage and premium payment at the local and master level as well
as automated notifications to network participants following
payment events. The pilot also demonstrates the ability to include
third parties in the network, such as brokers, auditors and other
stakeholders, giving them a customized view of policy and payment
data and documentation.
Rob Schimek, CEO of Commercial, AIG said: “Our pilot proves
blockchain has a powerful role to play in the future of insurance.
Any technology, including blockchain, that can increase trust and
transparency for an industry whose pillars are built on that,
should be fully explored. We’re excited to be delivering innovation
that matters to our clients – and co-developing key components of
this new technology together.”
The three parties chose to execute this initiative in one of the
most complicated areas of Commercial Insurance – multinational risk
transfer – to better understand blockchain’s potential to reduce
friction and increase trust in other areas of the insurance value
chain.
How it works:
- Blockchain, an immutable, security rich
and transparent shared digital ledger provides a single view of
truth across all participants while simultaneously providing
selective visibility to participants based on their
credentials.
- It provides the ability to record and
track events and associated payments in each country related
to the insurance policy.
- No one party can modify, delete or even
append any record without the consensus from others on the
network.
- This level of transparency helps reduce
fraud and errors, as well as the need for the parties to contact
each other to view policy and payment data and the status of
policies.
Emily Jenner, Head of Insurable Operational Risk at Standard
Chartered, said: “As a global bank we have to ensure consistent,
trustworthy and secure financial transactions, be that as part of
our business or as customers ourselves. By creating a process by
which we can arrange multinational insurance contracts through
blockchain we not only have transaction security but contract
certainty across multiple business locations.”
Marie Wieck, General Manager, IBM Blockchain said: “There is
tremendous opportunity to apply advancements in blockchain
technology to transform the insurance industry. By creatively
leveraging smart contracts to help address tough regulatory
requirements across different markets, we are seeing the enormous
impact blockchain can have to improve efficiency and open up new
business models.”
The multinational “master policy” is written out of London and
for the pilot, three local policies were chosen that cover the US,
Kenya and Singapore. These three jurisdictions were chosen because
the US is a large and complex market, Singapore is a growth market
for Standard Chartered, and Kenya has a specific regulatory
requirement, known as “cash before cover” which means that cover
must be paid for before it is valid.
“We chose these three territories because of their importance to
Standard Chartered and also because of their regulatory complexity,
so that we could fully test how blockchain technology might make
these contracts work more efficiently,” said Standard Chartered’s
Jenner.
Notes to Editors
AIG
American International Group, Inc. (AIG) is a leading global
insurance organization. Founded in 1919, today AIG member companies
provide a wide range of property casualty insurance, life
insurance, retirement products, and other financial services to
customers in more than 80 countries and jurisdictions. These
diverse offerings include products and services that help
businesses and individuals protect their assets, manage risks and
provide for retirement security. AIG’s core businesses include
Commercial Insurance and Consumer Insurance, as well as Other
Operations. Commercial Insurance comprises two modules – Liability
and Financial Lines, and Property and Special Risks. Consumer
Insurance comprises four modules – Individual Retirement, Group
Retirement, Life Insurance and Personal Insurance. AIG common stock
is listed on the New York Stock Exchange and the Tokyo Stock
Exchange.
Additional information about AIG can be found at www.aig.com and
www.aig.com/strategyupdate | YouTube: www.youtube.com/aig |
Twitter: @AIGinsurance www.twitter.com/AIGinsurance | LinkedIn:
www.linkedin.com/company/aig. These references with additional
information about AIG have been provided as a convenience, and the
information contained on such websites is not incorporated by
reference into this press release.
AIG is the marketing name for the worldwide property-casualty,
life and retirement, and general insurance operations of American
International Group, Inc. For additional information, please visit
our website at www.aig.com. All products and services are written
or provided by subsidiaries or affiliates of American International
Group, Inc. Products or services may not be available in all
countries, and coverage is subject to actual policy language.
Non-insurance products and services may be provided by independent
third parties. Certain property-casualty coverages may be provided
by a surplus lines insurer. Surplus lines insurers do not generally
participate in state guaranty funds, and insureds are therefore not
protected by such funds.
IBM
IBM is the leader in open-source blockchain solutions built for
the enterprise. As an early member of Hyperledger, an open source
collaborative effort created to advance cross-industry blockchain
technologies, IBM is dedicated to supporting the development of
openly-governed blockchains. IBM has worked with more than 400
clients across financial services, supply chains, IoT, risk
management, digital rights management and healthcare to implement
blockchain applications. For more information about IBM Blockchain,
visit www.ibm.com/blockchain.
Standard Chartered
We are a leading international banking group, with more than
80,000 employees and a 150-year history in some of the world’s most
dynamic markets. We bank the people and companies driving
investment, trade and the creation of wealth across Asia, Africa
and the Middle East. Our heritage and values are expressed in our
brand promise, Here for good.
Standard Chartered PLC is listed on the London and Hong Kong
Stock Exchanges as well as the Bombay and National Stock Exchanges
in India.
For more information please visit www.sc.com. Explore our
insights and comment on our blog, BeyondBorders. Follow Standard
Chartered on Twitter, LinkedIn and Facebook.
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version on businesswire.com: http://www.businesswire.com/news/home/20170615005586/en/
AIG:AIG Europe Ltd.Nicola Ratchford, +44 20 3217 1789Head
of CommunicationsorAIG CommercialMatt Gallagher,
+1-212-458-3247Head of CommunicationsorStandard
Chartered:Bart Nash, +44 207 885 7598Head of Corporate Affairs,
EuropeorIBM:Holli Haswell, +1-720-396-5485Director External
Communications, Industry PlatformsorHannah Slocum,
+1-978-877-0105External Communications
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