Tech giant Intel has helped to prepare China’s first white paper on the application potential of blockchains in the reinsurance sector.
The “Reinsurance Blockchain (RIC) White Paper” (再保险区块链（RIC）白皮书) released in Shanghai last week was jointly produced by China Re Group, HannoeverReinusrnace, German General Reinsurance, ZhongAn Insurance, ZhongAn Technology and Intel.
The White Paper bills itself as China’s first “empirically verified reinsurance blockchain guidance outline,” providing a “comprehensive and systematic analysis of the commercial value, applications, design concepts and implementation cases of reinsurance blockchains.”
In March Shanghai’s insurance regulator worked with China Re Group and ZhongAn Technology to create China’s first blockchain reinsurance testing platform based on the unique features of the industry.
The platform selected a range of distinctive base technologies to ascertain the viability and advantages of the use of blockchain technology to process reinsurance transactions.
The results of the tests indicate that blockchains can greatly raise the accuracy and efficiency of transactions processing by the reinsurance sector, creating a “multi-chain transaction ecosystem.”
The authors of the White Paper believe that blockchains can help resolve key problems faced by the reinsurance sector, chief amongst them the moral hazard incurred by information asymmetries, and the operating risk created by low levels of “informatization.”
These problems heavily impact the confidence of parties to reinsurance transactions, raise transaction costs, and impede the rapid development of the reinsurance market.
According to the White Paper the decentralised, open and anonymous nature of the blockchain can effectively resolve the reinsurance sector’s current problems by helping to “dismantle the black box” of reinsurance transactions, and raise the informatization level of transactions.
It outlines several areas where blockchains promise to transform daily reinsurance transactions, including:
i) Use of their decentralised character to achieve peer-to-peer transactions between reinsurance parties;
ii) Use of smart contracts to achieve automated account verification, settlement or liquidation of reinsurance and insurance policies;
iii) Raising the reliability and safety of reinsurance transactions, reducing costs and increase efficiency, as well as enhancing regulation and auditing of system transactions.