LONDON (Reuters) – Consulting firm Ernst & Young, data security firm Guardtime, Microsoft and ship operator Maersk have teamed up to create a blockchain-based marine insurance platform that will be the shipping industry’s first practical use of the nascent technology.
EY and Guardtime said the platform has been built and will be deployed in January, when AP Moller-Maersk will start using it in some of its business areas as part of a 20-week trial of the new platform. Insurance companies MS Amlin and XL Catlin.
A nearly decade-long slump in the global shipping industry has led many companies to seek ways to cut costs and ease pressure on working capital.
The Maersk-dominated container shipping industry has been hit hardest by a glut of ships and concerns about global demand, forcing shipping lines to seek greater cost efficiencies.
Shaun Crawford, global insurance leader at EY, said the 400-year-old marine insurance industry was one of the least efficient areas of the insurance industry. Shipping companies pay $30 billion a year in premiums.
Blockchain acts as a tamper-proof database that can be shared and updated in real time across the network. It can use computer algorithms to automatically process and settle transactions through so-called “smart contracts,” without third-party verification.
It is considered a potentially revolutionary technology in many fields, including financial services and healthcare. But so far, it has not been widely used outside of cryptocurrencies such as bitcoin, the technology’s birthplace.
“The importance of this, in my opinion, is that this is the first real enterprise use case for blockchain,” said Mike Gault, chief executive of Amsterdam-based Guardtime.
Gault said blockchain is “absolutely necessary” for the platform to work because it ensures that all parties – from shipping lines to brokers, insurance companies and other suppliers – have access to the same database, which can be integrated into in the insurance contract.
“Currently insurance transactions are too tedious and frictional,” Lars Henneberg, head of risk and insurance at Maersk, said in a statement. “Blockchain technology has the potential to facilitate long-awaited developments.”
The platform is built on Microsoft Azure cloud technology.
International insurance standards body ACORD and consulting firm Willis Towers Watson have also partnered to build the platform.
Reporting by Jemima Kelly; Additional reporting by Jonathan Saul; Editing by Cynthia Osterman
