Swiss Re: Reinsurance industry needs unified blockchain standards

Rage Comment : Technology standardization has a great impact on the development of technology, which has been proven by history. Therefore, in order to maximize the advantages of blockchain technology, the banking industry alliance R3CEV and the insurance industry alliance B3i have been established. Swiss Re and Munich Re, which were originally competitors, have also established a cooperative relationship. Industry-wide cooperation must be the future trend of technological development.

Translation: Annie_Xu

Swiss Re said that large companies are aware of the need for standards in blockchain technology projects, so the Blockchain Insurance Industry Initiative (B3i), a consortium of the world's largest insurance and reinsurance companies, is very important.

Kurt Karl, chief economist of Swiss Re and director of the company’s economic research and consulting department, said that the company and Munich Re fully recognized the need for blockchain standards in the traditional reinsurance market and therefore reached a cooperation intention.

Karl said that reinsurance business renewal usually requires 20 reinsurance companies to sign up to the same project, so the premise for reinsurance companies to gain the benefits and advantages of blockchain is to unify standards.

A number of insurance technology projects have emerged in the reinsurance field, which may lead to a competition between standards.

There is precedent for this situation: competing XML standards have led to high implementation costs and even the abortion of projects.

The world has realized that in the process of market evolution driven by technologies such as blockchain, unified standards are needed. That is why B3i was established and the two competing companies cooperated.

Karl said that reinsurance projects usually require the participation of 20 reinsurance companies, and "blockchain can improve its efficiency", providing the industry with an opportunity to reduce costs, and consumers will also benefit from it.

B3i is still in the proof of concept stage; due to the need for low cost and high efficiency of reinsurance companies, the importance of cost ratio will also be highlighted, but the pressure on cost and revenue still exists. Using blockchain to standardize the renewal of reinsurance business will promote the progress of the industry.

Kurt Karl

The insurance-linked securities market (ILS) and ILS fund managers will also benefit.

The B3i project will certainly disrupt the value chain between risk and capital, unlike some insurance technology companies that only want to support insurance risk mechanisms as capital market investors.

However, upgrading the reinsurance project renewal process can improve the operating efficiency of ILS funds and reduce risk costs; therefore, these trends and projects will become increasingly important.

However, this goal is not yet achievable, and even the most advanced insurance technology companies face issues with technology performance and scalability.

The Internet finance sector also provides us with a warning that competition between different projects and technologies has led to the fragmentation of standards in key areas, such as settlement. Therefore, the reinsurance industry should take this as a warning.

But time will solve these problems, blockchain technology still needs to develop, and its potential is attractive enough that competitors will definitely cooperate for it.