Swiss Re Ag · SIX:SREN
Swiss Re — Technical Presentation (November 2017)
38 slides from Swiss Re's technical presentation, Nov 7, 2017
Slide 1: Blockchain in Re/Insurance: Technology with a Purpose
Blockchain in Re/Insurance Technology with a Purpose Swiss Re Institute Paul Meeusen, Head Distributed Ledger Technology, Swiss Re Alessandro Sorniotti, Research Staff Member, IBM Rüschlikon, 7 November 2017
Slide 2: Agenda
Agenda • The Protection Gap • Frictionless Risk Transfer • How Technology Can Help • Benefits and Outlook 2
Slide 3: Protection Gap
Protection Gap 3
Slide 4: Significant Under-insurance: A growth market
Significant Under-insurance Across regions and classes of business • Large part of [natcat] risks non-insured • Insurance relying on subsidies • Growing pension funding shortfalls • Rising medical and health insurance costs • Preference to share rather than own • Global citizens wanting global cover
Slide 5: Listen to the customer and invent for the customer
Listen to the customer and invent for the customer. * Jeff Bezos, ] Founder and CEO, Amazon /
Slide 6: The Era of the Customer: Needs Have Changed
The Era of the “Customer” Needs Have Changed • People want efficient identification process • They have a profile to share • Don’t want Tech to bring vendor lock-in • Expect more intelligent claims management • Want (insurance) companies to co-ordinate • Customisation through standardisation Our res
Slide 7: Frictionless Risk Transfer
Frictionless Risk Transfer 7
Slide 8: Network Health Test
Network Health Test Less frictions make healthier network Score: 1 (low) – 5 (high) Trust Network Intermediaries Operating as a Intermediaries add Co-operative spirit network brings value efficiency, speed and brings high trust value 3.0 2.0 2.5 Insurance dilemma: Updating Transacting Sharing High t
Slide 9: Root Cause of Frictions
Root Cause of Frictions Reinsurance Risk Transfer – B3i’s Use Case Traditional ledger Distributed ledger Automatic $ Validation $ Automatic Automatic Validation Validation Data Input Insurer Reinsurer Retrocessionaire Reporting Reporting Reporting Shared Reporting ledger Reporting Automatic Automati
Slide 10: Entire value chain is ripe for automation
Entire value chain is ripe for automation Transaction flow across multiple layers of counterparties within the “Digital Vault” enabled by Smart Contract & Blockchain Retro- Capital Insured Insurer Reinsurer cession Markets Start here Smart Contract Blockchain 10
Slide 11: A Closer Root Cause Analysis
A Closer Root Cause Analysis Process Friction Points Policy/Premium Claims Financial Process Risk underwriting Management Handling Settlement Contract (un) Data duplication, Settlement and certainty and Manual processes, Challenges inefficiency and reconciliation identity pairing and latency fraud r
Slide 12: How Technology Can Help
How Technology Can Help 12
Slide 13: A Blockchain primer
A Blockchain primer Bitcoin is a blockchain, but not all blockchains are bitcoin 2008: Bitcoin introduces the first distributed system 13
Slide 14: A Blockchain primer
A Blockchain primer Bitcoin is a blockchain, but not all blockchains are bitcoin 2008: Bitcoin introduces the first distributed system that can run on anybody’s computer 14
Slide 15: A Blockchain primer
A Blockchain primer Bitcoin is a blockchain, but not all blockchains are bitcoin 2008: Bitcoin introduces the first distributed system that can run on anybody’s computer implementing a distributed, digital currency 15
Slide 16: A Blockchain primer
A Blockchain primer Bitcoin is a blockchain, but not all blockchains are bitcoin 2008: Bitcoin introduces the first distributed system that can run on anybody’s computer implementing a distributed, digital currency, maintaining a replicated, globally accepted world state Ledger Ledger Ledger Ledger
Slide 17: A Blockchain primer
A Blockchain primer Bitcoin is a blockchain, but not all blockchains are bitcoin 2008: Bitcoin introduces the first distributed system that can run on anybody’s computer implementing a distributed, digital currency, maintaining a replicated, globally accepted world state Ledger Ledger Ledger Ledger
Slide 18: A Blockchain primer
A Blockchain primer Bitcoin is a blockchain, but not all blockchains are bitcoin 2013: Ethereum introduces smart contracts . Ledger Ledger Ledger Ledger Ledger Ledger The system maintains its properties even in presence of corrupted/malicious nodes!! 18
Slide 19: A Blockchain primer
A Blockchain primer Bitcoin is a blockchain, but not all blockchains are bitcoin 2015: permissioned blockchains introduce strong identity management (who’s who) .. Ledger Ledger Ledger Ledger Ledger Ledger The system maintains its properties even in presence of corrupted/malicious nodes!! 19
Slide 20: A Blockchain primer
A Blockchain primer Bitcoin is a blockchain, but not all blockchains are bitcoin 2015: permissioned blockchains introduce strong identity management (who’s who) and access control (who can do what) Ledger Ledger Ledger Ledger Ledger Ledger The system maintains its properties even in presence of corr
Slide 21: Permissioned Blockchains: a digital board game
Permissioned Blockchains: a digital board game © https://hobbitabroad.wordpress.com/ 21
Slide 22: How to apply in re/insurance
How to apply in re/insurance Technology with a purpose Policy/Premium Claims Financial Process Risk underwriting Management Handling Settlement Contract (un) Data duplication, Settlement and certainty and Manual processes, Challenges inefficiency and reconciliation identity pairing and latency fraud
Slide 23: Contract Inception
Risk Policy & Premium Claims Financial Underwriting Management Handling Settlement Contract Inception What is being agreed? Who’s agreeing to it? How can it change? 23
Slide 24: Contract Inception
Risk Policy & Premium Claims Financial Underwriting Management Handling Settlement Contract Inception What is being agreed? • terms/obligations encoded as a computer program – No room for ambiguity • state immutably stored in the ledger – Perfect instrument for auditing/settling of disuptes • terms
Slide 25: Contract Inception
Risk Policy & Premium Claims Financial Underwriting Management Handling Settlement Contract Inception What is being agreed? Who’s agreeing to it? • easy to identify participants since in a permissioned blockchain, strong identity management is already in place • no need for centralized way of managi
Slide 26: Contract Inception
Risk Policy & Premium Claims Financial Underwriting Management Handling Settlement Contract Inception What is being agreed? Who’s agreeing to it? How can it change? • Artifacts in a permissioned blockchain (e.g. smart contracts) come with a namespace and a set of definable, flexible modification pol
Slide 27: Receivable/premium management
Risk Policy & Premium Claims Financial Underwriting Management Handling Settlement Receivable/premium management Once we have… • secure and efficient ways of determining who's who and who can do what… • …captured the business logic into a chaincode activation and processing of a smart contract is ve
Slide 28: Claims
Risk Policy & Premium Claims Financial Underwriting Management Handling Settlement Claims • The ledger is the globally accepted source of truth for all participants; It records all the actions happening in the system • What about exogenous variables, i.e. what happens outside the system? • an event
Slide 29: Claims
Risk Policy & Premium Claims Financial Underwriting Management Handling Settlement Claims Oracles can • either be trusted third parties acting as a data source • the collective input from a majority • The consortium can in turn offer an oracle service We’re reporting a windstorm Yup, seen it too Us
Slide 30: Financial settlement
Risk Policy & Premium Claims Financial Underwriting Management Handling Settlement Financial settlement There are different ways a blockchain can help with the settlement of financial obligations • interface with external systems (SWIFT, CLS, banks) to carry out payments • crypto currency built in t
Slide 31: Benefits & Outlook
Benefits & Outlook 31
Slide 32: As the network is growing…
As the network is growing… B3i’s Rapid Growth to 38 Members Market Testing Participants (Cat XoL Product) B3i Members • 2017 - Complete market testing • 2018 - Entity incorporation, product enhancement and first live transactions 32
Slide 33: … we move into market testing
… we move into market testing (Market Testing snapshot 13.10.2017) B3i members firms currently transacting contracts on sandbox platform (Market Test 9 Oct – 9 Nov 2017) B3i Market Testing Sandbox 9 Oct – 9 Nov 2017 33
Slide 34: … and further articulate our business case
… and further articulate our business case Overview of key blokchain benefits as seen by Swiss Re and B3i Working Capital Operational Efficiency Quality and Integrity of Foreign Exchange Improvement and Risk Reduction Data Management Faster and more Reduction of contract Normalised and high- Acceler
Slide 35: … with a strategic outlook and business plan
… with a strategic outlook and business plan “Masterplan” – how we see use cases develop in re/insurance 1 2 3 Reinsurance Commercial Insurance Primary Insurance (wholesale – B2B ) (retail – B2C) Materiality High Medium Low Transaction volume Low Medium High Homogeneity High (global) Medium (interna
Slide 36: Thank you
Thank you Paul Meeusen paul_meeusen@swissre.com Alessandro Sorniotti aso@zurich.ibm.com www.b3i.tech References: 1. http://institute.swissre.com/research/library/Rdm_Blockchain_Jags_Rao_Paul_Meeusen.html 2. https://www.youtube.com/watch?v=QOoZqlUYrws 3. Blockchain documentary: www.blockchain-documen
Slide 37: @ Swiss Re
@ Swiss Re 37
Slide 38: Legal notice
Legal notice ©2017 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivative works of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re. The information and opinions contained in the presentati