The (re)insurance industry’s first distributed ledger technology (DLT) driven risk and capital exchange, called the Bermuda Insurance Exchange, is set to launch in Bermuda later this year.
Created by ChainThat, a specialist provider blockchain solutions for the (re)insurance industry, the exchange will allow broker, reinsurance and insurance companies access to the capital markets using blockchain.
The exchange will allow the transfer risk and capital between direct insureds, brokers, cedants and captive insurers and insurance, reinsurance, industry loss warranties and insurance-linked securities (ILS).
It is expected to go live with a production trial in July 2019.
The exchange will be implemented in stages, first providing the framework for a traditional reinsurance market, including placement, accounting, settlement and claims.
New capital will then be introduced, supporting the same processes for ILS, and following that, ChainThat will add the ability to support securities and warranties, and ultimately provide trading of these instruments.
David Edwards, CEO of ChainThat, said the exchange was an opportunity for Bermuda to establish its place as “the most advanced insurance market in the world”.
Edwards added: “We are delighted to be unveiling this exchange that will cut frictional costs and allow brokers, reinsurance and insurance companies access to the capital markets using blockchain.”
ChainThat business development director Rebecca Oliver commented: “The exchange will enable the existing market participant businesses, brokers and risk carriers, to develop and market new competitive products and extend their distribution reach like never before.”
“Cost control and innovation are the two big issues that are being discussed in insurance board rooms around the world.”
She continued: “By automating the current operational framework, we believe the Bermuda Insurance Exchange provides the insurance and reinsurance market with the opportunity to both maintain margins while reducing pricing to the insured.”
“In turn, this will increase business performance and global competitiveness.”