AIG, the multinational insurance provider, has announced its first blockchain based insurance policy, that was issued to UKâs Standard Chartered Bank. The blockchain policy termed the âmaster policyâ governs multiple policies for the bankâs operations in various countries.
The insurance sector has found that blockchain technology can offer them loads of benefits at a fraction of the cost. The use of distributed ledger and smart contracts allows insurance companies to automate many processes, thereby reducing the time and resources otherwise required to issue policies and process claims. When it comes to multiple high-value policies, with varying risks spread across the world, the use of blockchain technology will relieve the insurance provider of a headache that comes with different versions of paperwork drafted in accordance with the requirements of multiple jurisdictions. It also eliminates the need to have multiple intermediaries between the insurance provider and the customer/policyholder.
In a report on one of the leading financial media outlets, the Head of AIG, Carol Barton mentioned that the new policy issued to Standard Chartered over blockchain helped the company cut down on months of processing time. She was quoted saying,
â Typically a multinational policy can take a lot of time because of local regulatory requirements. This [blockchain-based] system provides a lot of certainty more quickly. A process that could have taken months was cut down to a few days.
Ultimately, it makes it cheaper. There are a lot of frictional costs in chasing after things, but the system makes the process faster and more cost-effective. â
AIG implements the insurance policy for Standard Chartered in partnership with IBM Blockchain. The article also quotes the General Manager of IBM Blockchain Marie Weick saying,
âBy helping solve some of the biggest problems challenging the [insurance]industry, from eliminating silos of information to improving efficiency, blockchain can truly make an enormous impact and even lead to new business models.â
Meanwhile, there isnât enough information available on the policy itself, as Standard Chartered has refused to divulge any information about it. Other players are also exploring InsurTech at the moment, and there are few products in different stages of development. In the coming days, we will see more such solutions making it to the market, enabling everyone to buy and claim insurance on the fly.
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