Adoption of Blockchain technology in the Insurance sector has grown beyond the United Kingdom. The decentralized ledger technology, which acts as the backbone of the Bitcoin network will soon be adopted by the German Insurance major, Allianz.
Allianz, headquartered in Munich, Germany has announced the new development in its latest statement released to the press yesterday. The company will be initially implementing the blockchain technology for trades involving ‘CAT Bonds’ which is a short form for Catastrophe bonds. Allianz, with the latest technology, intends to transfer the risk of natural disasters like hurricanes and floods to investors, reports Jonathan Gould on Reuters .
The insurance sector has always been playing safe, protecting the investments received from its customers. Even when it comes to the payout of claims, insurance providers conduct an extensive investigation before releasing the money. In the case of CAT Bonds, the liabilities are generally very high as natural calamities usually cause extensive damage to lives and properties. In order to prevent itself from bearing the liability of claims, Allianz will shift the responsibility to its investors. Investors are unlikely to bear the burden without any additional incentives, so Allianz will be offering then attractive returns on CAT Bonds.
The blockchain solution for Allianz will be set up by a joint collaboration between the insurance provider and Nephila Capital , a Bermuda-based investment management company. According to reports, both the companies have already created a concept product which has already been tested as well. The companies have declared the test run to be a success with rapid processing and settlement of payments between insurers and the investors. The implemented smart contracts on the blockchain will automate the whole process, literally removing the requirement of manual processing and authentication. The levels of transparency associated with blockchain will also make these transfers […]
