Allianz pioneers blockchain prototype for the captive insurance market

Press Release | November 7, 2017 | London/New York/Paris/Singapore
  • Allianz Global Corporate & Specialty (AGCS) has successfully implemented a blockchain prototype for an existing global captive insurance program of a client
  • AGCS line of business Allianz Risk Transfer cooperated with EY, Ginetta and Citi Treasury and Trade Solutions
  • Prototype demonstrates that international insurance transactions can be significantly accelerated and simplified
  • Functionalities include cash payments, real-time access of tracked information and an intuitive, convenient user interface
Allianz Global Corporate & Specialty SE (AGCS) has successfully trialed blockchain technology for a global ‘captive’ insurance program including cash transfer between countries. AGCS's Allianz Risk Transfer (ART) line of business has teamed up with EY (Ernst & Young) as blockchain advisory service provider and digital agency Ginetta to successfully create a blockchain prototype solution (click for demo video) for the existing captive insurance program of a long-standing ART customer with global reach. In connection with this prototype, ART also joined forces with Citi Treasury and Trade Solutions which provided the payment processing services related to Allianz’s blockchain prototype. The results prove that blockchain technology can greatly improve the efficiency of corporate insurance transactions internationally.
“We are currently seeing many blockchain applications in the financial services industry and we are eager to explore the potential of this exciting technology in the corporate insurance segment,” explains AGCS Board Member Hartmut Mai. “The captive blockchain prototype is one further example of our commitment to leverage new technologies and drive innovation in insurance.”

Captive insurance programs are one of the most complex areas of commercial insurance. They are established by multinational organizations which self-insure instead of purchasing insurance. They create their own self-insurance programs or ‘captives’ which pool together selected assets or insurance exposures from their global operations, collecting premiums from each of their operating companies and paying out claims internationally as they arise. These captives may cover over 100 countries and hundreds of millions of dollars of insured assets. As a “fronting insurer” Allianz partners with the captive owner to administer each program, using the insurer’s international network in 210 countries and territories to fully comply with local regulations.

Blockchain technology automatically connects all parties involved in the captive insurance program – the captive management, local subsidiaries and the fronting insurer. Blockchain is a distributed ledger which is shared among a network of participants and can record transactions and data entries. Any updates or changes to the data are shared in real-time across all users. This creates a much faster, transparent, secure and efficient means of distributing information, conducting business processing and recording transactions across multiple parties.

The Allianz captive insurance blockchain prototype, built on the Blockchain framework Hyperledger Fabric 1.0, focuses on two types of insurance policies – Professional Indemnity and Property – for a captive insurance program with local subsidiaries in the US, China and Switzerland. The prototype looks at three common process flows in the captive insurance cycle – annual policy renewals, premium payments and claims submission and settlement. It translates these processes into the distributed ledger environment decreasing the time from start to policy, policy to premium and claim to settlement.

"Our captive insurance blockchain prototype demonstrates that regular transactions and cash transfer between fronting insurers and clients can be significantly accelerated and simplified,” says Yann Krattiger, Principal at ART. “Automated processing replaces the exchange of thousands of emails and massive data files. Each process is transparent and can be tracked in real-time. Our customers benefit from increased speed, reliability and auditability.”

EY Project Manager Isabella Brom says: “The captive insurance blockchain prototype is a prime example of EY’s approach on co-innovating with our clients. It allowed us to demonstrate and trial the power of distribution and decentralization in the transformation of the insurance industry, using the Hyperledger Fabric Composer toolset to achieve fast and flexible prototype results. The project deepened our and our client’s understanding of how applied blockchain technology will not only fundamentally change insurance as we know it but also create new business models.”

To process payments related to Allianz’s blockchain solution, Citi Treasury and Trade Solutions leveraged its CitiConnect® Application Program Interface (API) solution to accept payment instructions from Allianz’s captive insurance blockchain prototype. This connection allows Allianz to communicate directly with Citi, beginning with US dollars and eventually extending into more markets within Citi’s global network. "Citi is very proud to have been able to help Allianz achieve this industry milestone. By leveraging innovative, new technologies such as Allianz’s blockchain protoype and CitiConnect® API, we are able to partner to design new business models and rapidly implement them in a matter of weeks," said Tapodyuti Bose, Global Head of Channel, Enterprise and Account Services, Citi Treasury and Trade Solutions.

The digital agency Ginetta designed the intuitive, convenient user interface that incorporates the requirements of ART and its captive client. It visualizes core processes, and through real-time information allows tracking their progress by all relevant stakeholders around the world. Before creating the user interface all processes of captive insurance management have been reviewed, redefined and radically simplified. “With blockchain much focus is put on the technology, yet in reality perhaps 10% of the work is related to technology. The other 90% is rethinking the underlying processes and these in the end are all about people,” says Alan Cabello, Project Lead and Innovation Manager, AGCS Central and Eastern Europe.  

ART has already successfully tested blockchain technology, when partnering up with Nephila Capital Limited to successfully pilot the use of blockchain technology for transacting a natural catastrophe swap. In addition, Allianz SE is part of the B3i initiative, the Blockchain Insurance Industry Initiative, which recently launched a reinsurance blockchain prototype.

Allianz Global Corporate & Specialty (AGCS) is a leading global corporate insurance carrier and a key business unit of Allianz Group. AGCS provides risk consultancy, Property-Casualty insurance solutions and alternative risk transfer for a wide spectrum of commercial, corporate and specialty risks across 12 dedicated lines of business.

Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses, and private individuals. Among them are the world’s largest consumer brands, tech companies and the global aviation and shipping industry, but also wineries, satellite operators or Hollywood film actors. They all look to AGCS for smart answers to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience.

We constantly strive to deliver the best for our customers through our global team of around 4,400 employees from over 70 nationalities in 34 countries worldwide. As the one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial strength ratings and a global network in over 200 countries and territories. In 2018, AGCS generated a total of €8.2 billion gross premium worldwide.

Allianz Risk Transfer AG (ART) is 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. Founded in June 1997, the company is a wholly-owned subsidiary of Allianz Global Corporate & Specialty SE. Domiciled in Liechtenstein, ART operates through affiliated companies with offices in Bermuda, Dubai, London, New York and Zurich. Its client base spans across all industry sectors and its solutions are most effective for clients facing unusual or complex risks, where traditional (re)insurance or financial products are inadequate. As of today, ART AG is rated by AA- by Standard & Poor’s and A+ by A.M. Best.  For more information visit ART

The global EY organization is a leader in assurance, tax, transaction, legal and advisory services. We leverage our experience, knowledge and services to help build trust and confidence in the financial markets and in economies all over the world. We are ideally equipped for this task – with well-trained employees, strong teams, excellent services and outstanding client relations. Our global mission is to drive progress and make a difference by building a better working world – for our people, for our clients and for our communities.

The global EY organization refers to all member firms of Ernst & Young Global Limited (EYG). Each EYG member firm is a separate legal entity and has no liability for another such entity’s acts or omissions. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information, please visit EY.

EY’s organization is represented in Switzerland by Ernst & Young Ltd, Basel, with ten offices across Switzerland, and in Liechtenstein by Ernst & Young AG, Vaduz. In this publication, “EY” and “we” refer to Ernst & Young Ltd, Basel, a member firm of Ernst & Young Global Limited.

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

Additional information may be found at Citi Group website, their Twitter, YouTube, Blog, Facebook and LinkedIn.

Citi Treasury and Trade Solutions (TTS) enables our clients' success by providing an integrated suite of innovative and tailored cash management and trade finance services to multinational corporations, financial institutions and public sector organizations across the globe. Based on the foundation of the industry's largest proprietary network with banking licenses in over 90 countries and globally integrated technology platforms, TTS continues to lead the way in offering the industry's most comprehensive range of digitally enabled treasury, trade and liquidity management solutions.

Ginetta Web/Mobile consults clients on their digital strategy and designs and develops digital products that are simple, fast and beautiful. With a rooted user-centered approach, Ginetta has helped companies such as Swisscom, Migros and Helsana to make their digital business thrive and created popular apps for SBB Mobile (Swiss national railway company) and Doodle. For more please visit Ginetta.
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Allianz operates as an international insurer on almost every continent. Find Allianz in your own country/region.
With the Allianz network AGCS provides services in over 200 countries and territories.