German-based insurance giant Allianz has announced it has been successfully testing Blockchain technology and smart contracts for the processing of default swaps and bonds.
The company is feeling positive about the potential of technology to increase the competition among financial institutions.
Allianz Risk Transfer, founded in 1997, has been operating as the center of competence for alternative risk transfer business within the Allianz Group offering tailor-made insurance, reinsurance and other non-traditional risk management solutions to industrial and financial clients worldwide. Applying the Blockchain in insurance services
Allianz is not the first company to test Blockchain technology and research the application opportunities to improve services.
Earlier PwC announced that it will largely support the research of the application of Blockchain technologies in the area of insurance. Insurance provider John Hancock , in collaboration with ConsenSys Enterprise, began working on proof of concept using Blockchain and BlockApps .
Carrying the nontraditional approach to risk management Allianz Risk Transfer and Nephila Capital Limited announced that they have successfully piloted the application of Blockchain smart contract technology for transacting a natural catastrophe swap.
Company’s pilot is one of several tests applications of Allianz’s Disruptive Technologies division. It has demonstrated that Blockchain-based contracts could significantly accelerate and simplify transactional processing and settlement between insurers and investors, and increase tradability of cat bonds. It undoubtedly sets the direction for exploration of more opportunities to apply this technology to other insurance transactions. What are the ‘cat’ swaps?
Catastrophe or ‘cat’ swaps and bonds are financial instruments which transfer a specific set of risks (e.g. natural disaster risks) from an insurer to investors or other insurers utilizing triggers with defined parameters. Generally, ‘cat’ bonds follow an approach similar to financial ‘cat’ swaps, meaning that if the event occurs and meets the predefined trigger criteria, the third-party is responsible for the pre-agreed financial […]
