Enterprise blockchain and the Asian insurance market

By Ryan Rugg, Global Head of Insurance, R3

Insurance is a multi-trillion dollar industry that impacts almost every other sector of business, from healthcare to capital markets and aviation. 

As one of the fastest-growing markets, Asia accounted for 76% of the increase in global insurance business in 2017. However, future growth may be hampered by an outdated infrastructure with overly complex multi-channel processes. 

Operational inefficiency is the single biggest threat facing the insurance industry today, and insurers are now taking steps to tackle this challenge head-on with purpose-built enterprise blockchain technology.

Inefficiency and fragmentation 

Blockchain provides a solution to drive efficiency and security that would allow private data to be shared in a secure manner. 

Many policies are still sold over the phone rather than online, and the policies themselves are then processed on paper contracts, introducing huge potential for manual errors in claims and payments. 

This anachronistic infrastructure is even more surprising when you consider the complexity of the insurance ecosystem and the number of parties involved in a transaction, including consumers, brokers, insurers, reinsurers and more.

The costs of this inefficiency and fragmentation are well documented. Inaccurate, disparate sources of data acquisition lead to long underwriting cycles and inaccurate risk profiling. 

Extensive manual intervention is required across the insurance value chain, ranging from contract placement to claims settlement. Archaic billing systems and complex billing processes lead to high reconciliation costs. 

Ambiguity in loss conditions, assessment procedures and claim settlement delays leads to increased litigation risk. It has been estimated that as much as 60% of customer premiums is consumed by these inefficiencies.

In addition, increasingly stringent and dynamic regulatory requirements continue to impact areas such as renewals and claims assessment. Insurers often have a complete lack of visibility of their liabilities and obligations and a lack of transparency across the entire business. In today’s regulatory climate, it is unsurprising that authorities are beginning to demand more from insurers.


Blockchain technology is not a panacea for all of these problems, but with the right architecture, a platform can address and reduce inefficiencies. There are also new revenue and growth opportunities in cutting-edge sectors such as cyber insurance that blockchain technology can help enable.

The network effect 

Blockchain platforms such as R3’s blockchain platform Corda have been purpose-built for enterprise usage in industries such as insurance and tackle issues such as data privacy, scalability and security head-on. Following a period of experimentation with multiple consortia and technologies, insurers are now consolidating their blockchain efforts around Corda. 

Testament to this is the recent decision of the industry-leading B3i consortium to port from IBM’s Fabric to Corda or RiskBlock decision to port from Ethereum.  All the major insurance groups and ecosystems are coalescing on Corda in order to effect change and form standards. 

As Metcalfe’s Law states, the value of a network is proportional to the number of connections in the network squared – the more insurers that build upon on a common platform, the more valuable the platform becomes to all participants due to the interoperability of applications. The consolidation around Corda creates network effects industry-wide.

A brighter future

Blockchain technology offers great promise across many avenues and it is critical that the Asian insurance market is part of the revolution currently taking place across the industry. 

It’s clear from the industry’s recent consolidation around Corda that data privacy is pivotal for a network of enterprises and that the platform’s peer-to-peer data sharing approach matters for insurance blockchain applications going into production.

From contract placement to insurance as an industry, we are excited to see the new opportunities and efficiencies that blockchain technology will enable between this wide ecosystem of participants now that the right network – Corda – is in place. 

By Ryan Rugg, Global Head of Insurance, R3


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