Investor Centre has decided to stop using blockchain and move with the times, focusing instead on developing and facilitating ‘ecosystem innovations’ for the insurance market. It’s a pragmatic decision and one that could save money for re/insurance companies themselves and ultimately make the cost of accessing risk capital cheaper for ultimate end-customers.
It’s a testament to the fact that in most of the use-cases insurance technology specialists are looking for, blockchain just isn’t the answer. It does raise a lot of questions and complexities, rather than simplifying matters, and there’s an increasing sense that the solution is a hybrid model where traditional processes co-exist alongside newer digital ones.
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For example, when it comes to terrorism or nuclear disasters a single insurer might not have the capacity to take on a large proportion of the risk, so that type of risk is usually pooled. This is done on a country basis with each country pool offering reinsurance to other countries pools. It’s a model that has benefited from automation and efficiency, which could be delivered by blockchain solutions.
B3i’s new project focuses on parametric insurance – the type of cover that pays out based on a trigger event, such as wind speed or rainfall measurements. It has formed a collaboration with risk data provider RiskStream to develop a parametric insurance prototype that will initially focus on homeowners’ catastrophe cover. It’s an interesting move and the first of many projects that we expect to see from the group as it moves forward.