EY and Guardtime team up to launch marine shipping insurance blockchain

Insurance and assurance advisory service Ernst & Young Global Ltd. and Guardtime AS announced today the world’s first platform for marine insurance.

The platform, which will use distributed ledger technology to make it easy to transition to a fully paperless and secure system, was built in collaboration with Microsoft Corp., major multinational shipping company A.P. Møller-Maersk A/S, international insurance data standards body ACORD, specialty insurance company MS Amlin, global broker advisory company Willis Towers Watson and global insurance products group XL Catlin.

The objective of the global blockchain platform is to connect clients, brokers, insurers and third parties to distributed common ledgers that capture data about identities, risk and exposures. The system then integrates all of this information with insurance contracts using blockchain technology to provide a secure, distributed layer to protect privacy and provide auditability.

A blockchain acts as a broadly distributed database ledger that secures records cryptographically by hashing each new block of records with past blocks. In this fashion, attempting to change a historical record is easily detected because every node has a copy of the ledger and can compare encrypted hashes for authenticity. Because of their distributed nature, blockchains are highly resilient to tampering — providing a foundation of trust in historical records — and can also be permissioned so that outside parties can verify past records or audit transaction chains without revealing sensitive information.

“Blockchain’s potential to transform the insurance ecosystem has always been clear. What we have done is to move forward from potential to reality,” said Shaun Crawford, EY’s global insurance leader. “This solution is the first to apply blockchain’s transparency, security and standardization to marine insurance and is ready for commercial use.”

Industries such as global shipping and insurance have both sought out to test blockchain technology for its promise to make shorter work of complex documentation databases that need to be trusted for accuracy and reliability.

Blockchain-enabled shipping logistics tests and platform launches have ramped up in recent months. In May, Samsung SDS partnered with a consortium of Korean shipping interests. Then, in August, Singapore-based shipping giants joined IBM Corp. for a blockchain trial and Marine Transport International USA LLC and partner Agility Sciences Ltd. completed a pilot program.

In the insurance industry, blockchain firm Bitfury Group Ltd. and Risk Cooperative launched a distributed ledger project in June to pioneer the technology for robust insurance platforms. Other industry giants have offered blockchain platforms such as the IBM blockchain built on the Linux Foundation’s HyperLedger Fabric project, Stratumn SAS raised $7.8 million for a similar enterprise-ready data security platform.

An Allied Market Research report this year predicted that the blockchain distributed ledger market could reach $5.4 billion by 2013, with insurance and shipping as contributors.

“It is a priority for us to leverage technology to streamline and automate our interaction with the insurance market,” said Lars Henneberg, Maersk’s head of risk and insurance. “Insurance transactions are currently far too tedious and frictional. The distance between risk and capital is simply too far.”

Participants in this platform rollout expect to use the blockchain to improve capital and gain efficiencies. The platform also promises increased transparency and reduced manual data entry leading to lower reconciliation and administration costs.

The blockchain platform will make use of Guardtime’s Keyless Signature Infrastructure blockchain stack. The company tested the technology in a partnership with Estonia in March 2016 when it was used to secure over one million health records for the country.

As for cloud infrastructure, the platform will run on Microsoft Azure’s global cloud technology. “Microsoft believes blockchain is a transformational technology with the ability to significantly reduce the friction of doing business, especially streamlining business processes shared across multiple organizations,” said Mark Russinovich, chief technology officer at Microsoft Azure. “Marine insurance is a prime example of a complex business process that can be optimized with blockchain.”

Image: Pixabay

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