IBM Corp. announced Wednesday that Thai Reinsurance Public Co. Ltd., a technology-driven professional nonlife reinsurer, has launched “Insurer Network,” a reinsurance smart contract production network using IBM’s blockchain technology on its cloud.
The global pandemic has disrupted the insurance industry. For example, business restrictions in Thailand caused by COVID-19 have heightened the need for insurers to improve efficiency, reduce errors and lower costs.
“The COVID-19 pandemic and the need to digitally transform have urged organizations, not only in the insurance industry but all, to bring efficiency to the way we work,” said Thai Re Chief Executive Oran Vongsuraphichet. “Thai Re has continuously focused on prudent underwriting professional portfolio management as well as business innovation throughout the past 40 years of our operations.”
This new network uses distributed ledger blockchain technology to secure insurance information cryptographically between multiple parties to create a tamperproof historical record of insurance documents. Because the full ledger is shared among multiple parties and is protected by cryptography, it reduces copying errors and makes it extremely difficult to counterfeit, thus reducing the chances of fraud.
Blockchains are also programmable, permitting the ability to create what are called “smart contracts” between parties. The contracts can hold currency in escrow and transfer that currency when certain conditions are met.
Reinsurance is the practice whereby multiple insurers agree to take on a portion of a larger risk portfolio in an agreement to split up the total payout for an insurance obligation. When connected to a smart contract, this means when the condition is met – for example, a claim is made – the smart contract uses the blockchain to pull already allocated currency to pay the obligation from the connected accounts.
By using a blockchain, every party involved can be more certain that all members involved can meet their obligations and no fraud has been involved in the creation of the reinsurance contracts thanks to the tamperproof nature of the blockchain.
Through the launch of its “Insurer Network” platform on IBM Cloud, Thai Re believes that the company can streamline how it handles more than 10,000 annual reinsurance contracts with its insurance partners and make it easier for insurers to grow their business.
“Our goal is to make this platform beneficial to Thailand’s insurance industry while also serving the need of consumers,” said Pojaman Fuangaromya, executive vice president of Thai Re. “We plan to invite almost 100% of all insurers and brokers in Thailand to leverage this ‘Insurer Network’ blockchain-based smart contract platform within the next two years.”
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