IBM Brings Blockchain to “Antiquated” Insurance Compliance Processes
IBM is collaborating with the American Association of Insurance Services (AAIS) to streamline regulatory requirements and reporting, as well as bringing automation to insurance regulatory reporting via blockchain.
Together they have launched openIDL an open insurance data link that is built on the IBM Blockchain; in turn, based on Hyperledger Fabric.
“Ultimately, the goal of the openIDL is to turn expensive regulatory and compliance requirements into investments in operational efficiency and improved insights,” IBM said, adding that the system helped with “updating an antiquated compliance process”.
IBM commented in a released statement that: “Ultimately, the goal of the openIDL is to turn expensive regulatory and compliance requirements into investments in operational efficiency and improved insights.”
The system is built on The Linux Foundation’s Hyperledger Fabric which is the first blockchain system that runs distributed applications written in standard, general-purpose programming languages, (e.g., Go, Java, Node.js), without a systemic dependency on a native cryptocurrency.
Real Business Results
With openIDL, AAIS is updating an “antiquated compliance process” and pioneering a blockchain-based method whereby insurers can contribute data directly onto a secure blockchain platform to satisfy state regulatory requirements.
“Data is stored on an immutable blockchain ledger where historical and current information is recorded. Regulators are provided permissioned access to view only the information they need. Participating carriers will also be able to see their own data profile to understand how they compare to the market. Ultimately, the goal of the openIDL is to turn expensive regulatory and compliance requirements into investments in operational efficiency and improved insights”, the two said in a release.
Speaking to Computer Business Review Craig Bedell, Global Insurance Industry Executive and IBM Industry Academy Member commented that: “As permissioned blockchain, openIDL allows insurance companies to share with AAIS richer data than is regulatorily necessary with which AAIS can provide more robust analyses and bench-marking.”
“As an immutable record, blockchain will guarantee State Depts of Ins that they can audit past information much more effectively and efficiently.”
“This alone will reduce the scope and duration of periodic Market Conduct Exams, which will save carriers millions of dollars in associated expense while providing regulators assurance of a healthy insurance market in their jurisdiction.”
Sandip Patel, GM of IBM Global Insurance Industry said: “This is an exciting example of how blockchain can bring together an entire ecosystem of users and allow information to be shared in new ways to drive real business results. Hyperledger Fabric’s support for private and confidential transactions allows insurers to share data with the network, knowing that they own their data and have control over who has access to it.”
“While the initial phase of the openIDL focuses on data sharing and regulatory reporting, the open platform provides a foundation for even broader innovation and new applications in the future, while providing full privacy and confidentiality protection among parties.”
While AAIS CEO Ed Kelly said that: “We recognized the potential for blockchain to streamline the regulatory reporting process for our Member carriers, as well as the opportunity to improve security, accessibility and accuracy of data for regulators.”
See Also: IBM, Barclays and Citi Bank and foreign exchange settlement specialist CLS have teamed up to trial LedgerConnect.
IBM’s Blockchain offering has been used by other companies to bring the technology to main stream suppliers, such as their contract with Moller-Maersk the world’s largest container shipping company. Together they have created and released TradeLens a blockchain platform operating through IBM’s cloud offering.
TradeLens uses the blockchain to build smart contracts which allow multiple groups to work together with a single shared view of transactions that doesn’t break standards around privacy and sensitive data.
