Dave Hollander. Ian Meadows. Global Insurance Advisory Lead, EY. Global Insurance Blockchain Leader, EY. Blockchain: Moving from concept to reality

Transcription

1 Blockchain: Moving from concept to reality Dave Hollander Global Insurance Advisory Lead, EY Ian Meadows Global Insurance Blockchain Leader, EY

2 Structural issues within the current specialty insurance model Operational challenges Implications Duplication of data and process Technical results and growth difficult Lack of transparency Exposures, accumulations, credit and compliance risk High levels of reconciliation Cash locked in unnecessarily, duplicative costs globally An unsustainable business model Lack of agility to respond to customers demands at fair price

3 Market teaser video The insurance industry is finding ways that blockchain can enable change. View video

4 Availability of accurate data and timely management lies at the heart of the challenges for marine Static and dynamic data flows Data challenges Insurance policy documents (cargo, hull, liability) Confirm individual order/shipment Process cargo at origin port Cargo in transit (shipment) Process cargo at destination port Complete order and claim (if appropriate) Agent Broker Long delay (~120 days) to adjust policy and premiums Endorsements and claims Lacking clear asset value, leading to the risk of under- or overinsurance Capturing sufficient dynamic risk data to adjust asset value (and premium) Working with multiple insurers/third parties Compliance and KYC checks client asset and organization information, license and credit checks Vessel data engine, oil and routes Asset location, value and tonnage

5 We focused on new business model opportunities as well as cost and efficiency Distributed ledger multinational model Issues that are addressed End customer 1 Finance/treasury 2 3 ERM Accuracy of and trust in data Unsustainable economics Increasing error and fraud costs Inefficient cross-party accounting Loss adjustors/ lawyers 8 Identities, Risks & Exposures Data 4 Brokers New business model opportunities Group buying model Surveyors 7 6 Authorities/regulators 5 Insurers/ captive International payments and automated trade finance Managed services SMART claims and underwriting

6 Our platform has five key components Connected insurance Secure infrastructure Smart contract automation Asset tracking Identity management EY has developed a blockchain model with the following enablers: A) Identity management B) Asset register C) Smart contracts Customer Client Broker Insurer (Re) Insurer D) Declarations Distributed ledger E) Settlement ledgers

7 War risks video Blockchain in action blockchain and war-zone shipping Flexibility to protect ships and cargo through high-risk zones View video

8 Today s value chain is predominantly focused on the ability to manufacture products and processes Pre-bind Post-bind Sales Data capture Pricing U/W Admin. Claims RI High costs of acquisition exist 40% (15%-20% exp. ratio) Monoline insurances supported only Multiple post-bind activities required with low automation High levels of reconciliation needed No ability to track exposures exist Claims and reinsurance recoveries execution is slow

9 Our platform and smart framework digitizes rules between buyers and sellers to disrupt the value chain Source expertise Transfer risk Claims Reinsurance Multi-client models Increased automation and data in UW Smart claims Transparent capital management Buyers publish and sell the risk, including clients compliance checks automated Insurers publish rates bundling and unbundling Automatic distribution of documents Smart contract framework drives rules around sharing and transacting data Predefined business rules associated with market agreement and post-bind activities Activities traditionally managed post-bind are now brought forward in a digitized pre-bind agreement and peer-to-peer cash settlement is enabled.

10 The proof of concepts and production services require us to align clients, their clients and various alliance partners POC participants Maersk Willis Towers Watson XL Catlin MS Amlin EY TAX Legal TAS Compliance Advisory Independence ITA, Strategy, Ops, Risk EY blockchain innovation Alliances Guardtime ACORD Microsoft R3 CORDA EY global industries Insurance Automotive and transportation Technology

11 Success, however, depends upon managing and overcoming complexities across four key elements 1 Technology and data 2 Regulation 3 Organization and risk 4 Disruption and growth How well ledgers operate together A supporting regulatory model The cooperation of industry participants Disruption not digitization of existing Accurate and consistent data feeds Security and data ownership Coexistence with IT platforms Clear controls around data storage and permissions Resolution of issues relating to: Privacy A rethink of culture, skills, processes, inputs, outputs and KPIs Smart contract framework and logic Time and investment in growth opportunities created Scalability Timing and location of transactions

12 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US Ernst & Young LLP. All Rights Reserved EYG no GBL EY (UK) 09/17. CSG London. ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. ey.com