This document provides an overview of a business strategy masterclass on blockchain presented by B3i. The masterclass aims to create a common understanding of blockchain, provide tools and best practices for blockchain adoption, and allow collaboration between market participants. The document discusses challenges in the insurance industry that blockchain could help address, such as high costs, regulatory reporting, and lack of trust in data. It provides examples of how blockchain could reduce costs, improve data quality and transparency, and enable new types of smart contracts. The masterclass also covers key success factors and barriers to blockchain adoption in insurance. Attendees participate in group exercises to collaboratively design blockchain solutions to facilitate risk transfer and present their ideas to the other group.

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LEARN | EXPERIMENT | COLLABORATE

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Amsterdam, 14
th
November 2018
Business Strategy Masterclass

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What to expect in the Business Strategy Masterclass?
Create common understanding of Blockchain1
Create environment to collaborate with different market participants2
Understand benefits of Blockchain technology3
Provide tools and best practices to get Blockchain adoption within your
company
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The Problem
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The way in which we exchange information today is inefficient, expensive and has both security and
human error vulnerabilities.
Retail broker Wholesale broker CarrierClient
ReinsurerRegulatorBank

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Retail broker Wholesale broker CarrierClient
With Blockchain
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ReinsurerRegulatorBank
A shared, distributed, auto replicated and permissioned based ledger.

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What is Blockchain?
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Tamper evident
(“immutable”)
Private
Transparent &
set data format
Cryptographically
secured
Public
Distributed ledger Consensus
Smart Contracts
Blockchain is a digital ledger that provides a shared single source of truth between multiple trustless
parties. Blockchain has the following attributes:

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Codified business logic – “if X occurs, do Y”
§ X = objective trigger
§ Y = insurer’s contractual obligations
Contract is self executing / no human review is required
§ Contract is triggered by a deterministic event
Oracles (e.g. flight or weather database)
What is a Smart Contract?
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Blockchain technology – What is it for B3i?
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Challenges of the insurance industry
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High costs due to administrative friction
Regulatory reporting requirements
Increasing number of complex contracts
Paper processes
Lack of standards
Trust concerns with respect to data
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Reduced administrative costs and friction
§ Reduced friction through the elimination of reconciliations or re-keying of data
Automatic contract terms and conditions
§ Self execution of contractual terms when verified event occurs (e.g. hurricane)
§ Reduced administrative costs
Digital data exchange
§ Greater fluidity and efficiency in trading risks, value and assets in real team
Trust in the data and its security
§ Increases contractual certainty and transparency of data
Regulatory and compliancy transparency
§ Openness and continuous monitoring and auditing
Benefits Blockchain can bring to insurance
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Decision criteria – When to use Blockchain technology
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Multiple parties generate digital transactions that change information in a shared repository
Multiple parties update data and these actions need to be permanently recorded
Participants need to trust that the recorded actions are verified as valid
Intermediaries introduce an unnecessary complexity in communication and information exchange
Enhanced security is needed to ensure integrity of the system
If these conditions are (largely) met, Blockchain is likely to be more suitable than a
standard database or other solution

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Six core opportunities for the Insurance industry
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Closing / reducing the
Protection Gap
Improving data quality and
consistency
Reducing
transaction costs
Entrance of new market
participants
Enabling optimal
utilisation of data
Setting standards and
enabling interoperability
Growth Quality Efficiency

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Our experience - What do we have to do?
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Manage expectations
and be patient
Learn and
Educate
Collaborate and
Engage

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Singular key success factor for consortiums
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Single
Common
Interest

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What are key barriers to overcome
in order to successfully implement
a Blockchain solution in the
Insurance environment?

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Key success factors
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“Must-go” central control
Only partial cover of value chain
Limited market participation
Key to B3i’s solutionKey barriers to success
Peer-2-Peer transactions
§ Direct private transactions w/o central entity
§ DLT enables “one truth” solution
Strong industry momentum
§ 13 founding shareholders, 25 market testers
§ Representing > 700bn USD GWP
Ecosystem approach
§ Open ecosystem fosters collaboration
§ Entire value chain covered

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The B3i ecosystem – Facilitate the network
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B3i
DLT
Core
B3i
products
Partner
products
Partner
services
Large
Commer-
cial
Reinsurer
Insurer
Private
investor
Broker
Risk
manager
Consumer SME
Financial
institution
…
B3i software products target
frictionless transfer of risks through
smart contracts (e.g. Prop Cat XOL)
B3i distributed platform allows Partners
to offer smart insurance contracts and
value added services to the B3i network
B3i infrastructure enables customers
to transact on a trusted and secure
shared ledger network

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If Blockchain is the right tool,
how do you get the right
stakeholders to buy into it?

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ACORD
Insurance Blockchain ecosystem
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Blockchain
Corda
HyperledgerFabric
Ethereum
Insurwave

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Insurance case studies – Overview
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Quotation Process
Proof of insurance
Reinsurance
Claims
Marine blockchain
Regulation
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2
4
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Insurance case studies – Quotation process
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To build an efficient, transparent, secure and easy to use platform for negotiations between brokers
and insurers
§ Mainly manual
§ Absence or low utilisation of a
common platform for data
exchange
§ Extensive amount of to-and-from
Traditional approach
§ A shared real-time view
§ Tamper-resistant and auditable
§ Shared agreed data standard
DLT approach
§ Easy on boarding
§ Secure communication
§ Smart & secure storage
§ Highly automated
§ Structured negotiation
§ Transparent audit trails
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Insurance case studies – Proof of insurance
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“By using Blockchain technology, Marsh is
fundamentally transforming the certificate of
insurance process from complicated and manual
to streamlined and transparent, allowing clients
to speed up necessary business functions such
as hiring contractors and transferring risk while
increasing coverage certainty.”
“The insurance industry has been
dependent on paper certificates
of insurance, manually
populated by an
insurance agent.”
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Insurance case studies – Auto claims
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Insurance case studies – Reinsurance
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§ Single source of truth
§ No rekey
§ Builds premium schedule and
the associated payables and
receivables
§ Distributes materialised updates
of losses to reinsurers
Shared
ledger
Smart
contracts
The Blockchain Insurance Industry Initiative
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Insurance case studies – Marine insurance
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Insurwave takes clients, brokers, insurers, and third parties and connects them
to distributed common ledgers that capture data about identities, risk, and
exposures, integrating this information with insurance contracts.
Blockchain will provide unprecedented visibility to accurate ship and coverage data across
the entire maritime market landscape
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Insurance case studies – Data sharing with regulators
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OpenIDL (open insurance data link)
§ Efficient, secure and permission based collection and sharing of statistical data
§ Streamlines regulatory reporting
§ Provides new insights for insurers
§ Enhances timeliness, accuracy and value for regulators
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Break

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How can you use your understanding of
Blockchain and the above experiments to
collaborate?
With the participants at your
table, build a Blockchain network
solution that will facilitate risk transfer

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Table work (30 minutes)
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Describe the solution1
Describe the generated value2
How will the value be generated?3
Describe the role of each participant4

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Collaborate across tables (30 minutes)
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Present your solution to the “board” from the other table1
Challenge other solutions2
Discuss how to sell your idea internally?3
Discuss the barriers (mindset, prioritisation, system, products, …)?4

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Presentation and Q&A