Embracing blockchain could help reduce prices, says Swiss Re

Swiss Re sees an opportunity to reduce costs through technology such as blockchain, which could also translate into it being able to lower prices.

The primary insurance sector is seizing opportunities offered by technology for example in the form of telematics in motor insurance to better assess risk and create new products that are better tailored to clients.

But for reinsurers like Swiss Re, technology may offer an opportunity to reduce cost and therefor prices.

There are two areas where reinsurance focuses on technology and the first one is cost cutting, said Kurt Karl, Swiss Re chief economist, during a November 22 media briefing in London.

Karl cited a blockchain programme which is being developed by Swiss Re as an example. The technology that underpins the electronic currency Bitcoin is a method of recording data—transactions, contracts, agreements—in a way that allows the data to be simultaneously stored, but also updated in real time—on hundreds or even thousands of computers globally. Blockchain is deemed to make data almost impossible to tamper with—yet it is also accessible and updated instantly for every user.

Swiss Re has a blockchain-based concept in place which should allow for more efficient, transparent and rigorous processes in a panel of reinsurers participating in one contract, Karl (pictured left) explained. “If we get that right that saves some money for us,” he explained. Swiss Re reached out to its German competitor Munich Re to enable the creation of an industry standard the use of blockchain technology in the reinsurance industry.

Other players participating in the project would also benefit from lower expenses. “Of course it saves money for the entire industry which means that prices can come down and we can do more reinsurance and we can do more insurance products,” he noted.

Swiss Re is also using technology to help its clients to reach their clients. Swiss Re has, for example, created apps that access a database and facilitate underwriting mortality risk, Karl explained. “These kind of tools are useful for the small and medium-sized players as opposed to the big companies which have their own technology,” Karl said.