A blockchain for $30 billion marine insurance is currently in use. Shipping has always been in the business of taking risks. Furthermore, there are four types of risks that require marine insurance. Hull and machinery of the vessel itself. The container boxes on the ship. The cargo that is inside the container. In addition all the liabilities that you can incur as shipowner. These include pollution, damage to cargo as well as injuries to the crew. Insurwave is a blockchain platform which supports marine hull insurance. Businesses across the world are able to use the platform to manage risk across their organisation.
The system that has been used until now, tied up too many resources for the customers of marine insurance. It took up 75% of their time on insurance contract administration and 25% on risk management. Insurwave is changing this situation.
Insurwave is a joint venture between EY and developer Guardtime. They are using distributed ledger technologies developed by Microsoft Azure infrastructure. The risk for more than 1000 commercial vessels has been managed in the first year.
This is a digital insurance value chain. Participants are connected in a private network to a shared database in real time. Transactions that usually take days can be processed in minutes using computer algorithms. There is no need for third party verification.
The head of risk and insurance for AP Moller-Maersk said that moving to the platform has reduced inefficiencies for the company. They own 350 container vessels worldwide. This technology will support more than 500,000 transactions in the first year.
Ultimately through the use of IoT and smart contracts, policies will be updated automatically to reflect the risks covered. This combination of technologies will thus help improve efficiency in claims assessment and payment.
Amazon is in the insurance business. The retail giant is offering Amazon Protect across Europe. The policy covers accidental damage, breakdowns and theft of objects. Coverage is for two to four years from the delivery of the product. All these incidents are thus covered.
This major retailer is considering offering home insurance as well. Rivals in the industry are worried. At the S & P Global Ratings insurance conference, analysts assured competitors that there was no reason to panic. Joshua Shanker, a Deutsche Bank AG analyst stated that initially Amazon would offer a “bare-bones” policy.
Last year insurers in the US and Canada generated $92 billion of premium from homeowners. Another point made was that it is time consuming to set up the legal entities needed to underwrite risk.
Amazon has made moves into other big regulated industries. Pharmacy companies were nervous when Amazon acquired licences in more than a dozen states to sell healthcare products as a wholesaler. The retailer has an edge over competitors in that its vast store of data on consumers could be a tool for pricing insurance.
Furthermore, Jeff Bezos, Warren Buffett and Jamie Dimon want to fix healthcare. A partnership has been developed between Amazon, Berkshire Hathaway and JP Morgan Chase. The latter is the nation’s largest bank. Together they believe that one of the country’s biggest problems is soaring healthcare costs.
The new company is still unnamed. However, a spokesperson said that the new company will be “free from profit-making incentives and constraints”. There are 840,000 global employees between these three companies. Initially they will concentrate on providing health cover for these employees. They will not offer a product to other companies.
The three companies mentioned have extraordinary resources. Berkshire Hathaway which owns the auto-insurer Geico is a big player in the insurance and re-insurance business.