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Digitizing Risk Transfer – Proof of Concept

RFIB Group Ltd has collaborated with ChainThat on a blockchain proof of concept enabling the distribution of digital risks across markets, brokers, and insureds. The shared data enables the on-demand generation of proof of insurance certificates to the insured on behalf of local brokers and begins to underpin a truly digital risk ecosystem.

Digitizing Risk Transfer
This proof of concept aims to address some of the questions faced by brokers in the markets in the 21stcentury.

  • How can we optimize the pre- and post-bind placing process in terms of improving efficiency, speed and client satisfaction?
  • How can we add value to our markets and our placing brokers, and in turn, the end insured?

Angus Kennedy, CIO of RFIB Group, said:  ‘We had been working with Whitespace to support the launch of their electronic risk placing platform and, separately, exploring with ChainThat potential use cases for blockchain. We realised there was an opportunity to merge these two technologies into a single pilot to try and address some of these market challenges.

The Whitespace platform gives us the capability to initiate the placing process with a digital Market Reform Contract which can be presented to the markets for quoting, negotiating, and signing: all the while giving end users a great user experience.

The ChainThat platform gives us the ability to ingest the Whitespace digital MRC which is automatically shared, completely securely, to the contract counterparties (carriers, local brokers, insureds). Once the contract is on the distributed ledger, the ChainThat platform greatly simplifies key activities including generating insurance certificates, accounting and settlement, as well as Claims First Notification of Loss.’

Leveraging blockchain technology, data can be easily shared across a secure network, so in the scope of this pilot, data is instantly shared across a network made up of carriers, local brokers, insureds, and RFIB as the wholesale broker. Each node on the network has a copy of all the data shared with it making analysis, reporting, and reconciliation straightforward.

Smart Contracts
Using the federated data, blockchain enables the automatic generation of ‘smart’ contracts such as electronic certificates of insurance. The process steps around requesting, generating, notifying and accessing the certificates of insurance are logged as transactions so all parties in the contract have consistent visibility and an audit trail of the transactions. The certificates are generated instantly: benefiting both brokers and their clients. 

For brokers, this will mean they are able to provide clients with instant documentation which allows them to go about their business.

For their clients, the immediate issuance of a certificate means they will have the information to hand – literally, in the case of mobile apps – to confirm they continue to be compliant with the contractual insurance requirements for the service they are providing. 

Today’s process of generating certificates, on the other hand, is detached from placing since certificates are typically generated and issued, often in paper format, separately by the local broker, given the lack of data-sharing from the placed MRC. 

Post-Bind Efficiency
In terms of claims, insureds (i.e. claimants) can provide first notification of loss by directly informing the carriers, while brokers are kept in loop of the loss event. Using distributed ledger technology, agreement and processing of claims can happen between the insurers, brokers and third-party loss adjustors while the insured is always kept informed about the latest activities on their claim. This significantly reduces the processing times of the claim and enhances customer experience.

E-Placement Interoperability and Straight Through Processing
The introduction of Lloyd’s electronic placement mandate and PPL has been an important step in modernising placement into Lloyd’s and is helping to increase efficiency in placing risks and in turn improving customer service. Structured Data Capture (SDC) is also helping to solve data-quality issues for MGAs by allowing them to transform physical MRCs into data for ingestion.  We are now seeing alternative placing platforms being approved by Lloyds for e-placement which in turn introduces new challenges to the Lloyd’s market: how will these platforms co-exist in a way that doesn’t dilute the efficiency gains achieved through the mandate?

Angus Kennedy, CIO of RFIB Group, said:  ‘With distributed ledger technology, interoperability can be achieved – out of the box – by federating the contract data across the counterparties during the pre-bind process. SDC and Whitespace have both been proven to accurately digitize contract data which can then be passed to the blockchain. Each counterparty or node is then a single access point for consumption of this data post-bind which can be ingested into each counterparty’s back-office systems to achieve straight-through processing.’

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