Blockchain and insurance, failures but not only…


Automatic execution of contracts and penalties, immutability and veracity of data, saving time and money… In appearance, the blockchain seems to have been invented for insurance, but not everything is to be taken.

Traceability of intercompany flows

In 2021, the French insurer AXA via its subsidiary AXA Partners has partnered with the SaaS solution developer Stratumn around the project BlockCo with the dual ambition of improving internal collaboration and optimizing cash management. In insurance, intercompany flows correspond to the circulation of an invoice between two entities of the same organization. In the case of an international structure, it is necessary to ensure that the VAT rate is the correct one for each invoice, but also to juggle between the different information systems such as Excel, Oracle, Sharepoint… In 2020, AXA carried out a study internally which revealed that 66% of employees found the invoicing process long and painful. The BlockCo project is based on the combination of a robotic solution based on automation, coupled with blockchain technology and implemented on the insurer’s management system.

Why did it work? The solution is a delight for the subsidiaries AXA Partners Holding, AXA Partners France and AXA Partners Belgium by automating 83% of the intercompany flow management process and reducing the time devoted to these tasks by 70%. Around 3,000 invoices and 400 million euros are processed annually via this tool.

supply chain

Streamline the journey of containers from their pick-up to storage, including customs validation… This is the challenge facing the software publisher IBM and the Danish carrier Maersk decided to confront each other. Their weapon? Tradelens. The private blockchain developed by IBM makes it possible to offer APIs composed of an information storage module and an electronic validation system. As insurers are directly connected to the network, they can audit any information in real time. “When we talk about insurance fraud, we are referring to information that has circulated badly, has been badly collected or that is deliberately incorrect”, specifies Vincent Fournier, blockchain leader at IBM. The circulation of instantly verifiable data is in this a good way to compensate for an erroneous declaration.

Why did it work? With a network of more than 300 members including MSC, Seaboard and CMA CGM, Tradelens facilitates the tracking of 65% of global maritime traffic. A success that calls for other uses. In March 2022, the platform formalized its collaboration with Bolero, a BaaS company specializing in the digitization of transactions. The objective is to link banks and insurance companies within the same network for greater control of financial flows.

Allianz, Munich Re, Deutsche Rück, Generali…In total there were 15 insurers and reinsurers to meet around the project B3i in October 2016 before being joined by a dozen other heavyweights including the Frenchman Covea. In March 2018, the consortium became a company. The project ? Build a platform for sharing data directly on the blockchain, initially focusing on contracts related to natural disasters and marine insurance. The purpose of the private network was to list the various actors involved, to facilitate the daily life of brokers and to promote seamless interoperability between all insurance businesses. In April 2022, Allianz and the reinsurer Swiss Re, for example, signed the first XS excess of loss reinsurance contract on the platform.

Why didn’t it work? After an initial fundraising of $6.3 million when it was created in March 2018, the company renamed B3i Services concluded a second funding round in February 2019. And then nothing… On July 28, 2022, the company announced that it was filing for bankruptcy following an inability to raise new funds. The financial director of Swiss Re completed this answer by the difficulty of arriving at a profitable formula.

Purchase and sale of UCIs

In 2017, the Sapin 2 law introduced the possibility of carrying out fund unit transactions directly on the blockchain. An opportunity seized by a handful of French management companies, namely OFI AM, Groupama AM, La Financière de l’Echiquier, Arkéa Investment Services, Lyxor, Generali and La Banque Postale. In March 2019, blockchain IZNESdeveloped by fintech SaaS Stratumn came into being. A step forward which carries with it the possibility of buying and selling fund units by freeing itself from the traditional infrastructure overseen by Euroclear, one of the two securities depositories with Clearstream.

Why did it work? By bypassing the post-trade scheme which brings together transfer agents, banks and fund depositories, the IZNES blockchain has created a direct connection between buyers and sellers of funds. Faster and less expensive transactions are the main benefits for users of the solution. A dozen companies are active on the platform, which totals 10 billion euros in assets under register, referenced and held on the private blockchain hosted by AWS, AZURE and OVH.

Parametric Compensation

In September 2017, AXA was proud to present its platform Fizzy which it was selling as the first blockchain-based insurance to be launched by an industry flagship. This product, available on the web and mobile, allowed passengers on a delayed flight to be automatically and instantly compensated. Concretely, the smart contract collected the information of each flight in real time via an oracle, these protocols which supply each blockchain with off-chain data. The insured did not need to send proof to his company, and the latter therefore had no resources (time or money) to devote to the verification and calculation of indemnities.

Why didn’t it work? Two years after its launch, the project was aborted. According to AXA, two elements are at the origin of the failure: the market’s lack of appetite for this type of offer and the difficulty in finding the right distribution channels. The insurer specified that Fizzy did not achieve its commercial objectives and that the platform had registered 11,000 policies and proceeded to the compensation of a hundred travelers.

Termination of contracts

Entry into force on 1er January 2015, the Hamon law gave any policyholder hired for more than a year the possibility of changing car or home insurance contract. Two years later, 14 insurance companies supported by the start-up Stratumn and consulting firm Deloitte have embarked on a cross-insurer blockchain initiative, led by digital services company Sopra Steria. The basic objective was to streamline the sending and receiving of termination notifications through a decentralized register governed by the execution of smart contracts. A technological breakthrough that was supposed to modernize time-stamping mechanisms and compensate for traditional time-consuming termination processes.

Why didn’t it work? The main reason for this failure lies in its use case. A project, even functional, which pushes the customer to go to the competition can only aspire to a short future.

Unemployment benefits

Declare your situation, provide supporting documents, update yourself, update your experience, provide supporting documents and update yourself… The monthly routine of job seekers is not easy. In April 2020, AXA Partners and Stratumn partnered with Swedish public service Arbetsformedligen around the project Blockchain for unemployment. The stated ambition was to provide an infrastructure based on blockchain technology to streamline and automate unemployment benefit payments for around 400,000 Swedes.

Why did it work? Simplified declarations, reduction of the risk of data entry errors, lightening of the bureaucratic burden… Benefits which, however, force job seekers to authorize their public service to collect and use their data. Beyond an improvement in the NPS (net promoter score, editor’s note) it is a new vision of compensation that appeals to interested parties.

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