Process reinsurance contracts via distributed ledgers
Sector: Tertiary sector · Industry: Insurance · Organisation: B3i Services AG, Allianz, Aegon, Munich Re, Swiss Re, Zurich Insurance Group, SCOR · Maturity level: Pilot
B3i Services AG, founded by major insurers including Allianz, Munich Re, and Swiss Re, developed a blockchain platform for administering reinsurance contracts. Utilizing Hyperledger Fabric, the initiative deployed smart contracts to automate policy management and claims processing across an international broker network. Following initial pilot deployments and incorporation in Zurich, the consortium ceased operations after filing for insolvency in 2024.
Documentation status
- Project status: Operator insolvent (as of 15 September 2024) — The operating company B3i Services AG had to file for insolvency in 2024 after a failed follow-up financing.
- Evidence: Evidence medium
- Editorial review: pending
Description
B3i Services AG was founded by leading primary insurers and reinsurers such as Allianz, Munich Re and Swiss Re to standardise the management of reinsurance contracts via a shared DLT platform. By using smart contracts on Hyperledger Fabric, complex contracts like catastrophe excess of loss coverages could be stored digitally and tamper-proof. This shared data basis avoided repeated manual reconciliations between cedents, brokers and reinsurers and reduced operational friction losses.
The Blockchain Insurance Industry Initiative B3i started in 2016 as a joint consortium of global insurers and reinsurers and was incorporated as an independent public limited company in Zurich in 2018. The technical development team in Munich developed the Fluidity platform based on the open-source DLT framework Hyperledger Fabric. The focus was on prototypes for Cat-XOL and Property-XOL contracts, which were tested in trial phases together with an international broker network. The architecture allowed participating institutions to exchange confidential contract data encrypted and variably per partner without relying on central intermediaries. Despite technical feasibility and successful pilots, a long-term economic breakthrough was not achieved, leading the operating company to file for insolvency in 2024.
Perspectives
B2B — organisations perspective
For the involved primary insurers and reinsurers, the platform created a unified environment for contractual data exchange and automated billing. This shortened coordination loops in complex multi-party contracts and minimised bilateral discrepancies in the event of a claim.
Employees perspective
Underwriting and contract administration specialists received a synchronised data view across all involved counterparties through the system. Instead of time-consuming manual data matching in spreadsheets, teams could focus on risk analyses and contract negotiations.
Benefits
General
- Shared data basis for all involved contracting parties
- Tamper-proof history of contract changes and claim notifications
- Shortening of turnaround times in contract reconciliation
B2B — organisations
- Reduction of administrative costs in reinsurance exchange
- Faster processing of claims
- Increased transparency between brokers, primary insurers and reinsurers
Employees
- Elimination of manual and error-prone spreadsheet reconciliations
- Real-time access to consolidated contract statuses
Challenges
General
- High coordination effort to agree on uniform data standards
- Complex legal and regulatory requirements in the international financial sector
- Ensuring long-term financing of an industry-wide consortium
B2B — organisations
- Difficult integration into existing proprietary legacy IT systems of insurers
- Competitive situation among consortium partners regarding strategic direction
Employees
- Need to build technological know-how around distributed ledger systems
Technology foundation
The platform was based on the distributed ledger framework Hyperledger Fabric, which as a permissioned network enabled the establishment of private data channels between selected business partners.
Implementation examples
B3i platform for processing reinsurance contracts
In the international reinsurance business, heterogeneous legacy systems and media discontinuities caused significant friction losses in contract reconciliation. The consortium aimed to eliminate reconciliation efforts and accelerate claims payments through a shared ledger infrastructure.
B3i Services AG implemented a consortium platform based on Hyperledger Fabric to automate catastrophe reinsurance contracts. Primary insurers and reinsurers used the system for joint contract creation and claims reconciliation.
Within the Blockchain Insurance Industry Initiative, multinational insurance groups combined their activities to modernise the reinsurance market. The system digitally mapped contract prototypes for property and Cat-XOL coverages via Smart Contracts and directly involved brokers in the process. Development was primarily carried out by a software team in Munich, while B3i Services AG coordinated commercialisation from Zurich.
Challenges mainly lay in harmonising different data standards and strictly maintaining business confidentiality between competing market participants. Hyperledger Fabric was chosen to technically enforce confidential transaction channels between specific parties.
Tags
Reinsurance, Hyperledger Fabric, Smart Contracts, Consortium, Claims processing