The introduction of blockchain technology in the insurance industry will likely help firms cut expenses and speed up claim settlement, says Moody's Investors Service in a report published Monday.
According to the report, the Blockchain Insurance Industry Initiative (B3i) on Sept. 10 unveiled a prototype that uses blockchain technology to streamline contracts between insurers and reinsurers, providing insurers, reinsurers and brokers with a shared view of policy data and documentation in real time.
"Blockchain's shared digital ledger has the potential to increase the speed and reduce the friction costs of reinsurance contract placements. Reinsurers would use the common platform to streamline claims analysis, potentially reducing significantly their administration and management costs," the Moody's report says.
Once the technology "becomes mainstream", which Moody's sees as likely, "we expect that it will significantly reduce policy management expenses and speed up claims settlement for insurers and reinsurers," the report says.
B3i's application is slated for beta testing in October, the report notes, and will be open to any firm that wants to utilize the technology, regardless of whether they currently belong to the consortium.
B3i also expects to broaden the application for use in various types of reinsurance, catastrophe bonds, and other insurance-linked securities.