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Business agreements among multiple parties involve a lot of moving parts – a recipe for friction. With blockchain, aka distributed ledger technology, insurers and insureds can permission, validate and trust each other, sans the friction. In this case study Marsh, ACORD and ISN created one of the first instances of a commercial digital proof of insurance using IBM Blockchain technology, with a goal of adding speed, trust and protection.
ISN is in the business of connecting hiring clients in capital intensive industries with contractors for projects such as construction. ISN’s hiring clients want to trust but need to verify that all aspects of the contractor’s business are valid, including credentials, training records and most important of all, their insurance certificates. Businesses take risks when they hire contractors, so proof of indemnification is critical. ISN gathers this proof and makes it available to clients doing vetting as part of the hiring process.
The problem is the currency of the certificate of insurance and the ability of hiring clients to trust that the contractor’s insurance certificate is valid and legitimate. Why is it not always current? There are five parties in this use case: the contractor selling their services, ISN that connects contractors to hiring clients, hiring clients that want contractor services, Marsh which provides insurance brokerage services to ISN, and finally the carriers that provide insurance. For a variety of reasons, the insurance certificates that are issued when a policy is issued do not flow across from the carriers to Marsh and then onto ISN. The result can be loss of revenue for the contractor, project delays to the clients because of inability to verify, or increased administrative costs for Marsh because of labor required to verify.
Distributed ledgers solve these issues. IBM Blockchain facilitates transactions in real time, generating a digitally signed, provable and permanent record. The insurer records the proof of insurance once, at policy bind time. The blockchain ledger replicates it across the business network simultaneously. No more mismatches, data gaps or delays.
By providing appropriate permissions, verification can be checked by any authorized party in the network. Contractors can check that their insurance is valid; ISN is assured that contractor insurance certificates are current – and more importantly – legitimate. The parties verifying the certificate of insurance have confidence that the insurer actually issued the certificate. They know it hasn’t been tampered with because the insurer digitally signed the certificate when committing it to the distributed ledger. In short, blockchain heightens visibility and trust to expedite smooth transactions.
IBM Blockchain supports Marsh, ISN and ACORD in creating permissioned distributed ledgers to address both trust and verification for proof of insurance in contracting networks. Built on Hyperledger technology, IBM Blockchain is used to improve transaction performance and reliability.
Learn more about IBM Insurance here.
Learn more about IBM Blockchain here.