A new reinsurance trading platform being sponsored by the Blockchain Insurance Industry Initiative is "a means to an end" rather than the goal itself, according to the head of the industry-backed project.
The initiative, known as B3i, launched the production version of its property catastrophe excess-of-loss placement platform Oct. 15. B3i is backed by 19 global insurance and reinsurance firms, including AXA SA, Allianz Group, Munich Re Co. and Swiss Re AG.
Certain B3i users will be using the platform to buy property catastrophe excess-of-loss reinsurance at the Jan 1, 2020, renewals, when between 50% and 60% of the world's reinsurance renews. John Carolin declined to say how many contracts, or what volume of gross written premium, will be traded.
Speaking to journalists at the launch of the product, Carolin stressed that the product "is an implementation of our vision. It isn't our vision. We don't stop here." The company is launching the product, he said, to demonstrate what B3i can do, in a bid to tempt third parties to develop applications that sit on B3i's network.
"This is really just a proof point for us as an organization to show that we are capable of delivering what is needed," Carolin said.
It is also designed to allow B3i to understand contract terms at the point they are agreed because many of the efficiencies B3i is targeting "come through a re-imagining of the whole contract lifecycle," Carolin said. He also emphasized that B3i has no intention of pushing aside other placement solutions in the market.
"We are not building a placement solution to compete with broker solutions. We want to see broker solutions built on top of our tech stack," he said.
B3i is seeking partners rather than building further applications itself because the insurance industry is "super-complex," and it would take time for the company to build up expertise in the various specialties, regions and regulatory requirements, Carolin said. Rather, the expansion beyond property-catastrophe excess of loss will come from "enabling partners who best understand the lines of business they are in and their local geographies to extend our solutions for their use cases."
The overall aim is to cut administration costs in the insurance market, which Carolin said "has been super-inefficient for a long time."
B3i uses distributed ledger technology, commonly known as blockchain in reference to the system that backs up the Bitcoin cryptocurrency, to ensure that there is one record of all the stages and documentation in a transaction. This is intended to boost contract certainty and efficiency.
While Carolin declined to disclose the number and premium value of the contracts that will be placed using the B3i excess-of-loss product, saying they were "internal targets," he said success at the upcoming renewal would be "large complex treaties that are significant to the industry being placed by the B3i platform and demonstrable value having been created for the parties involved."