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Blockchain could save reinsurers billions

New world: Arthur Wightman, head of PwC Bermuda, has spoken of the potential benefits blockchain technology has for the reinsurance industry

Reinsurers could save up to $10 billion in costs by using a new way of collating information.

Arthur Wightman, head of professional services firm PwC Bermuda, said that blockchain — a computer file underlying a mutual distributed ledger where blocks of information added in sequence cannot be changed or deleted — had huge potential to transform the reinsurance industry.

Speaking at the Rendez-Vous conference in Monte Carlo, Mr Wightman said: “Blockchain technology is still a new and uncertain area for reinsurers but has the potential to deliver millions in operational savings, improve efficiency and accuracy and improve client satisfaction within reinsurance.

“Proactive reinsurers are looking at front end underwriting and market potential where the technology could be most disruptive.”

He was speaking as PwC unveiled a report in Monte Carlo which said that reinsurers in line to build some of the biggest blockchain applications outside the payments sector could save between $5 billion and $10 billion a year.

The report added that reinsurers able to build, assess and refine blockchain applications would steal a march over the rest of the industry and “raise the bar” for competitors.

PwC estimated that, by simplifying reconciliation and multiple data entries, blockchain methods could slash expenses by 15 to 20 per cent.

And the report said that blockchain technology could speed up claims processing verification and also allow primary insurers to cede or retrocede risk using an application specially designed to process treaties, notify all parties and process premium and commission payments.

PwC said it had worked on a number of proof of concept applications to show the potential for blockchain in reinsurance and insurance and how the technology could be applied in practice.

The firm added: “We believe it’s important to show that blockchain applications not only work, but provide the right solutions to important business problems.”