The London Market, which is the major international insurance market in the United Kingdom, is undergoing plans to modernize. Part of that plan may include the use of blockchain technology, the main innovation behind Bitcoin, to improve data access and reduce the costs that come with administrative paperwork.
Lloyd’s, a key participant of the London Market held a seminar last week in London to highlight several technologies, including blockchain that could improve or otherwise innovate areas of the insurance market. It’s all part of their plan to modernize the experience of insurance market participants called the Target Operating Model.
Blockchains, which record transactions and protect Bitcoins from double spending, could be used to increase risk-recording abilities, transparency, accuracy and speed in the insurance markets.
Shirine Khoury-Haq, Lloyd’s director of operations told CoinDesk in a statement: “Blockchain has the potential to improve the way insurers record risk, increasing the speed, accuracy and transparency of our processes. As part of the TOM consultation we will be interested to see how blockchain could help us resolve some of the challenges facing our industry.”
Two use-cases for blockchain were floated at the seminar. The first was for blockchain-powered “deal rooms” wherein documents would be securely shared and logged. The second was for a permissioned ledger for insurance markets. The ideas were presented by Michael Mainelli, executive chairman of Z/Yen, a think tank and venture capital firm and a professor at Gresham College.
The so-called “deal rooms” would completely revolutionize the way business is done in the London Market. Currently, markets rely on physical proximity to one another, personal relationships and paper documents to get deals done. The use of a digital deal room could make the London Market more attractive to international business, which would drive significant growth for both Lloyds and the market itself.
“If we were sitting in Hong Kong right now and decided to create a global insurance market,” Mainelli added. “We could build a quick deal-room and we would automate it from the start.”
A deal room based on blockchain would take out the need to trust an intermediary while providing an accurate record of the documents shared by all participants. The database would be unalterable and owned by nobody. It’s simply an accurate ledger of who sent what to who and when.
Other technologies were presented at the Lloyd’s seminar including peer-to-peer lending and alternative cross-border payments. The goal of the seminar was to simply debate the risks and rewards of technological disruption. The Target Operating Model is a five-year plan to “support the ease of doing business” in the London Market and technological innovations like this could be an important step.