World’s first blockchain platform for marine insurance now in commercial use

  • EY, Guardtime and industry participants launch the world’s first marine insurance blockchain platform.
  • Technology will support more than half a million automated ledger transactions and help manage risk for more than 1,000 commercial vessels in the first year.
  • Plans to expand platform to other types of business insurance including marine cargo, global logistics, aviation and energy sectors.

EY, Guardtime, A.P. Møller-Maersk, Microsoft and insurance industry leaders Willis Towers Watson, XL Catlin, MS Amlin and ACORD announce members of the marine industry are using Insurwave, a blockchain platform to support marine hull insurance. In an increasingly complex and ever evolving risk landscape, global businesses will use the platform to transform how they manage risk across their organization, and how they work with brokers and (re)insurers.

Insurwave, built by a joint venture between EY and Guardtime, leverages blockchain and distributed ledger technologies Microsoft Azure infrastructure and ACORD data standards. It will support more than half a million automated ledger transactions and help manage risk for more than 1,000 commercial vessels in the first year. By connecting participants in a secure, private network with an accurate, immutable audit trail and services to execute processes, the platform establishes a first of its kind digital insurance value chain.

A.P. Moller – Maersk contributed to the development of the blockchain technology as a pilot client and is continuing on the platform with its marine hull portfolio.

Lars Henneberg, A.P. Møller-Maersk A/S Head of Risk and Insurance, says:

“Our ambition is to drive the digital transformation of the transport and logistics industry and we see this platform as a testament to the value that can be extracted from streamlining areas of our industry that still rely on manual and often complex procedures. Operating around 350 owned container vessels across the world, marine insurance takes up considerable resources for us. Moving it to this platform is helping us automate manual processes and alleviate a range of inefficiencies and frictional costs in the way we have used to trade marine insurance.”

Shaun Crawford, EY Global Insurance Leader, says:

“It is a proud moment for a number of heavy weight industry participants to be live with a genuine end-to-end blockchain platform in the specialty insurance market. All parties have worked extraordinarily hard, as a closely knit team, to get to this exciting milestone. To move from proof of concept just a year ago to a fully functioning platform that is delivering immediate value to clients feels exceptional.”

The first phase of Insurwave rollout is focused on marine insurance, and EY, Guardtime and Microsoft plan to roll it out to other types of business insurance for the marine cargo, global logistics, aviation and energy sectors.

Mike Gault, Guardtime CEO, says:

“We are very proud of the work we have done with EY in developing this platform, beginning with a proof of concept a year ago and then all the way through to this production release. This represents an important milestone not only for the insurance industry but also for blockchain technology, proving it can deliver real value to enterprise customers.”

Blockchain set to disrupt the insurance industry, say industry participants

Bill Pieroni, President and CEO at the global insurance industry organization ACORD, says:

“This solution represents a true innovation for insurance and demonstrates the potential of blockchain for transforming our industry. We are happy to be part of this initiative as it makes an impact across all insurance stakeholders and the entire value chain.”

Dr. Paul Taffinder, Director of Strategy and Innovation, MS Amlin, says:

“MS Amlin has long championed a culture of innovation and investing in new technologies. As a business, we are continuously looking to find new ways of doing things to further improve our client proposition. The success of the marine blockchain platform is a concrete example of where this innovative technology is being deployed to drive positive change in the insurance industry.”

Matthew Kerner, general manager, Azure blockchain engineering at Microsoft, says:

“Blockchain is opening up new possibilities for how enterprises do business with one another, turning complex processes into cost-saving business efficiencies. Microsoft is thrilled to work alongside EY, Guardtime, Maersk and marine insurance industry leaders to bring this platform into production on Azure, proving the enterprise value of blockchain.”

Alastair Swift, Head of CRB GB & Head of Transportation Lines, says:

“We are delighted to be at the forefront of blockchain technology which has the potential to revolutionize the insurance industry. This is the first insurance transaction that has been undertaken through blockchain, simplifying and streamlining the transactional process and creating added value for our clients. We strongly believe this is an industry dynamic and that all carriers and brokers should engage in blockchain to drive improved transactional efficiency and innovation for our clients.”

Martin Henley, Chief Information Officer, XL Catlin, says:

“With this blockchain, we are bringing together — for the first time — all the parties of the insurance value chain on a single platform. Ultimately, through the use of IoT and smart contracts, policies will be updated automatically to reflect the risks covered; and this combination of technologies will help improve efficiency in claims assessment and payment. Those are tangible wins for our clients, no matter their industry. And with the platform going live, we are now ready to start working on opening it up to other insurance segments.”

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Insurwave delivers digital pathway for marine insurance

Insurwave is a software engineering company established in June 2018 through a joint venture with EY and Guardtime. The Insurwave SaaS platform provides a digital pathway for risk owners and participants in the commercial lines insurance ecosystem to exchange private data in real time to support placement, administration and servicing of commercial lines insurance contracts.David Power, CEO, (below left) and Stefan Schrijnen, CCO, (below) from Insurwave explain the benefits it brings to the marine insurance community.

As risks ebb and flow, risk owners are increasingly looking for data driven solutions that help them to better manage their risks in an increasingly evolving and dynamic risk landscape – to support new business models, improve efficiency and drive growth for competitive advantage.

Many of the incumbent insur- ers and brokers have responded to the data challenge by either throw- ing more people at the problem to manage the paper flow that exists today within their organisation or to semi-digitise existing processes.

What is needed is a fundamental rethink about how they handle the data for the benefit of their clients. This becomes an increasing chal- lenge as the marine sector starts to become defined in data and risk events become increasingly availa- ble for consumption through APIs. Consuming and managing that data will be a differentiator, those that cannot address this data explosion could well be crippled by ‘big paper’ rather than crippled by ‘big data’.

Technology driven solutions and shared platforms are vital to better serve the clients of the sector in a digital manner. We need to start to engage in a new technology direction based on the data that is available and reduce the paper-spreading linked to the risk-spreading so that the ecosys- tem can operate effectively.

The Insurwave ‘digital pathway’ is a smart pipe that enables real time, enriched data flows on a common SaaS platform. For the marine com- munity we are providing a platform that can digitise, enrich and share vessel data, consume risk events and auto-service post-bind changes, such as war risk declarations. We deal with data privacy and trust through distributed cryptography to manage permissions and access rights that enable a trusted digital ecosystem.

We are working to reduce the costs of the ecosystem that consume up to 40% of a client insurance wallet. We believe that operating in a digital manner will open up opportunities for the insurance sector to offer dif- ferentiated risk management servic- es leveraging one shared view of the data.

Insurwave to reduce operational costs by 25%

Insurwave, the marine blockchain platform launched by EY and Guardtime in May 2018, is already starting to bring “material” cost savings to its users, according to its chief commercial officer Stefan Schrijnen.

In an event hosted jointly by EY and its blockchain offshoot – which is now its own trading entity – Schrijnen spoke of the significant financial, “real-world” benefits the platform is already providing for its clients.

“A big one is around the cost of servicing, in terms of the cost of administering insurance for risk owners, brokers and insurers. This relates to the cost of several processes, including warzone declarations and calculating premium adjustments based on changes to dynamic risk data,” he explained.

“Right now, and for the last year, our platform has been automating those things and we have measured a 25 percent cost reduction relative to the pre-Insurwave costs… which were manual and took months. That is a real saving.”

Schrinjen claimed the platform delivers a more reliable, trustworthy view of risk owners’ exposures, which they can share with their underwriter to provide clarity on the risk that they’re actually underwriting.

“Something we’re managing in terms of the pre-Insurwave data package versus the post- Insurwave data package is the rate that our ship owners are able to achieve in the market, and there’s real money in that today,” he said.

Schrijnen identified breach notification as the most significant business benefit for the circa 2,000 vessels Insurwave now has on board. He estimated that risk owners not on the platform receive notifications for only a quarter of breaches, pointing towards an environment of “extreme under- reporting.”

In terms of cost-savings, Schrinjen calculated that for every dollar of premium on the marine blockchain platform, Insurwave creates a cost benefit of 5 cents.

“We’ve got about $75mn dollars on the platform and we’re delivering about $4mn of cash benefit per year,” he said.

Looking forward, Insurwave said the quality of the data processing it offers to its customers will be a key metric for efficiency.

Currently, he claimed, the blockchain’s circa 2,000 vessels receive 50 percent more data points than their non-Insurwave initiated counterparts but Schrinjen offered the ballpark target of producing 200 percent more data points for Insurwave users in the foreseeable future.

Part of the challenge, he added, will be achieving greater collaboration across the industry – even between competitors.