Adjoint
Richard Magrann-Wells from Adjoint explains the benefits of blockchain, what it can offer the captive industry and the opportunities that the captive industry presents to blockchain companies
What is blockchain?
Blockchain is a new way to share data. It is an honest ‘distributed ledger’. A way for authorised users to share and see the data that is relevant just to them. The technology is different from existing communal spreadsheets or data platforms. With blockchain all the parties can be sure that the data is trustworthy.
When a user can be certain that data is reliable, and tamper-proof, it is truly a game-changer. You no longer have to wait for confirmations and validation–with blockchain that is already baked-in. Trustworthy data can be used to drive business decisions with confidence.
How could blockchain benefit the captive industry?
Captive insurance requires interaction between insureds, captive management companies, reinsurers, fronting insurers, and regulators. If all parties shared a common trustworthy pool of data, in real-time, it would save vast amounts of time and resources that are spent on collecting and validating information. Captive management could post information, the reinsurer could underwrite based on that unchangeable information, and the regulator could use that same real-time information to supervise the insurance company. The other benefit is tracking the payments that flow through the value chain–premiums from local subs to frontiers, to captive managers, etc.
We will start to see the first impact in the first quarter of 2019. Our first product is already being tested in a production environment Q4 2018.
Can you explain smart contracts and how they are related to blockchain and captives?
‘Smart contracts’ refers to self-executing programmes. When you have reliable data you can use smart contracts to execute the next step in the process without waiting for human input or validation. With a few lines of code, a payment or a notice can go out automatically because the smart contract is activated by trustworthy data provided by the blockchain. The captive insurance industry requires careful adherence to process and procedure. Smart contracts can eliminate the potential for errors and delays by programming that process map directly into the ledger known as blockchain.
Some people presume that implementing a blockchain solution requires uprooting legacy systems that have driven the industry for years. That is not the case. The only potential obstacle that blockchain faces is the hype that preceded the technology.
Do you foresee a large impact long term?
Blockchains are just a better toolkit. They won’t cure cancer, but just as email and spreadsheets have transformed the way we communicate and calculate, blockchain will forever change the way we share information over the internet.
The captive industry is proving a terrific starting point for this technology. The participants tend to be sophisticated. They are methodically regulated. The business is extremely process intensive. All of this provides opportunity for improvements leading to significant cost savings and a improved client experience–with the implementation of distributed ledgers and smart contracts.
Is Adjoint working on anything in the captive insurance/blockchain space?
Yes. We already have a few applications in the insurance industry in production today. Where captives are concerned, we cannot yet disclose the parties involved, we can reveal that by early 2019 one of the larger corporate captives will be run using Adjoint’s open-source blockchain platform ‘Uplink’. We are working with brokers, insurers, and corporate captive owners–all of whom will benefit from the efficiencies that the Adjoint platform, combined with proprietary embedded smart contracts, will deliver.
