Allianz pioneers blockchain prototype for the captive insurance market

Allianz Global Corporate & Specialty SE (AGCS) has successfully trialed blockchain technology for a global ‘captive’ insurance program including cash transfer between countries. AGCS's Allianz Risk Transfer (ART) line of business has teamed up with EY (Ernst & Young) as blockchain advisory service provider and digital agency Ginetta to successfully create a blockchain prototype solution for the existing captive insurance program of a long-standing ART customer with global reach. In connection with this prototype, ART also joined forces with Citi Treasury and Trade Solutions which provided the payment processing services related to Allianz’s blockchain prototype. The results prove that blockchain technology can greatly improve the efficiency of corporate insurance transactions internationally.

“We are currently seeing many blockchain applications in the financial services industry and we are eager to explore the potential of this exciting technology in the corporate insurance segment,” explains AGCS Board Member Hartmut Mai. “The captive blockchain prototype is one further example of our commitment to leverage new technologies and drive innovation in insurance.”

Captive insurance programs are one of the most complex areas of commercial insurance. They are established by multinational organizations which self-insure instead of purchasing insurance. They create their own self-insurance programs or ‘captives’ which pool together selected assets or insurance exposures from their global operations, collecting premiums from each of their operating companies and paying out claims internationally as they arise. These captives may cover over 100 countries and hundreds of millions of dollars of insured assets. As a “fronting insurer” Allianz partners with the captive owner to administer each program, using the insurer’s international network in 210 countries and territories to fully comply with local regulations.

Blockchain technology automatically connects all parties involved in the captive insurance program – the captive management, local subsidiaries and the fronting insurer. Blockchain is a distributed ledger which is shared among a network of participants and can record transactions and data entries. Any updates or changes to the data are shared in real-time across all users. This creates a much faster, transparent, secure and efficient means of distributing information, conducting business processing and recording transactions across multiple parties.

The Allianz captive insurance blockchain prototype, built on the Blockchain framework Hyperledger Fabric 1.0, focuses on two types of insurance policies – Professional Indemnity and Property – for a captive insurance program with local subsidiaries in the US, China and Switzerland. The prototype looks at three common process flows in the captive insurance cycle – annual policy renewals, premium payments and claims submission and settlement. It translates these processes into the distributed ledger environment decreasing the time from start to policy, policy to premium and claim to settlement.

To process payments related to Allianz’s blockchain solution, Citi Treasury and Trade Solutions leveraged its CitiConnect^® Application Program Interface (API) solution to accept payment instructions from Allianz’s captive insurance blockchain prototype. This connection allows Allianz to communicate directly with Citi, beginning with US dollars and eventually extending into more markets within Citi’s global network. "Citi is very proud to have been able to help Allianz achieve this industry milestone. By leveraging innovative, new technologies such as Allianz’s blockchain protoype and CitiConnect^® API, we are able to partner to design new business models and rapidly implement them in a matter of weeks," said Tapodyuti Bose, Global Head of Channel, Enterprise and Account Services, Citi Treasury and Trade Solutions.

The digital agency Ginetta designed the intuitive, convenient user interface that incorporates the requirements of ART and its captive client. It visualizes core processes, and through real-time information allows tracking their progress by all relevant stakeholders around the world. Before creating the user interface all processes of captive insurance management have been reviewed, redefined and radically simplified. “With blockchain much focus is put on the technology, yet in reality perhaps 10% of the work is related to technology. The other 90% is rethinking the underlying processes and these in the end are all about people,” says Alan Cabello, Project Lead and Innovation Manager, AGCS Central and Eastern Europe.  

ART has already successfully tested blockchain technology, when partnering up with Nephila Capital Limited to successfully pilot the use of blockchain technology for transacting a natural catastrophe swap. In addition, Allianz SE is part of the B3i initiative, the Blockchain Insurance Industry Initiative, which recently launched a reinsurance blockchain prototype.

Allianz Global Corporate & Specialty (AGCS) is a leading global corporate insurance carrier and a key business unit of Allianz Group. AGCS provides risk consultancy, Property-Casualty insurance solutions and alternative risk transfer for a wide spectrum of commercial, corporate and specialty risks across 12 dedicated lines of business.

Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses, and private individuals. Among them are the world’s largest consumer brands, tech companies and the global aviation and shipping industry, but also wineries, satellite operators or Hollywood film actors. They all look to AGCS for smart answers to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience.

We constantly strive to deliver the best for our customers through our global team of around 4,400 employees from over 70 nationalities in 34 countries worldwide. As the one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial strength ratings and a global network in over 200 countries and territories. In 2018, AGCS generated a total of €8.2 billion gross premium worldwide.

Allianz Risk Transfer AG (ART) is the center of competence for alternative risk transfer business within the Allianz Group offering tailor-made insurance, reinsurance and other non-traditional risk management solutions to industrial and financial clients worldwide. Founded in June 1997, the company is a wholly-owned subsidiary of Allianz Global Corporate & Specialty SE. Domiciled in Liechtenstein, ART operates through affiliated companies with offices in Bermuda, Dubai, London, New York and Zurich. Its client base spans across all industry sectors and its solutions are most effective for clients facing unusual or complex risks, where traditional (re)insurance or financial products are inadequate. As of today, ART AG is rated by AA- by Standard & Poor’s and A+ by A.M. Best.  For more information visit ART. 

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EY’s organization is represented in Switzerland by Ernst & Young Ltd, Basel, with ten offices across Switzerland, and in Liechtenstein by Ernst & Young AG, Vaduz. In this publication, “EY” and “we” refer to Ernst & Young Ltd, Basel, a member firm of Ernst & Young Global Limited.

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Citi Treasury and Trade Solutions (TTS) enables our clients' success by providing an integrated suite of innovative and tailored cash management and trade finance services to multinational corporations, financial institutions and public sector organizations across the globe. Based on the foundation of the industry's largest proprietary network with banking licenses in over 90 countries and globally integrated technology platforms, TTS continues to lead the way in offering the industry's most comprehensive range of digitally enabled treasury, trade and liquidity management solutions.

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