ANZ and IBM have created a blockchain based proof of concept (POC) to improve reconciliation of payments between insurers and brokers. The POC was built using distributed ledger technology (DLT) and helps to reconcile “bordereau” statements – statements between an insurance broker and an insurer that record premiums owing in a given month. DLT is a fitting application to solve insurers’ headaches caused by a fragmented system of information recording payments owed to insurers by brokers on behalf of those insured.
World Bank Group has provided a helpful definition of DLT: “Distributed ledgers use independent computers (referred to as nodes) to record, share and synchronize transactions in their respective electronic ledgers (instead of keeping data centralized as in a traditional ledger).”
The current process for brokers remitting customer insurance premiums is [although we hate using this phrase] ripe for disruption. A broker will bulk pay all of its customers’ premium payments in a single transaction to the insurer’s bank. The insurer and broker have different records. There may be communications (e-mail, letter, telephone) which alter the records of one or more parties – and – there is no “single source of truth”.
But what does the POC actually do?
The POC helps with the complete life-cycle of the customer-broker-insurer relationship. Right from the establishment of policies, to user/customer identification, linking to policy wording, scheduling bulk payments through to maintaining one record of all payments made and outstanding between the parties. This POC could one day represent a sea change in the way insurers and brokers interact with one another.
Many participants in the tech ecosystem are bored of hearing about the latest blockchain invention to solve this or that and it has become somewhat of a buzzword. However, ANZ and IBM have clearly thought about a practical, relevant situation in which the many-to-many system could be solved by having a single source of truth. We look forward to seeing how the POC progresses from its nascent stage.
You can read the ANZ white paper here.
The experience of running a distributed ledger solution within New Zealand considering new tools for our customers’ problems has given us great insight into the process. The technical knowledge built within New Zealand is invaluable and will play an important role of how we remain an important part of our customers’ ecosystems.