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Insurance without the carrier coming soon


November 7, 2018   by Greg Meckbach


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A blockchain-based business insurance model that could see non-regulated investors as the capital providers is coming sooner that you think, although it may not necessarily arrive in Canada in the short term, predicts an executive who has led two major Canadian P&C carriers.

The insurance model touted by Estonia-based Black Insurance “is one of the more compelling examples of truly disruptive innovation in the insurance industry,” Sharon Ludlow, a corporate director and executive in residence for the Global Risk Institute, said at InsurTechTO Wednesday.

Sharon Ludlow, corporate director and InsurTechTO speaker

In a white paper, Black Insurance describes its business model as one in which it would provide insurance capacity to brokers, agents and managing general agents, using blockchain as the “main platform to get rid of centralized insurance companies.”

Blockchain is the database technology used by Bitcoin and other cryptocurrency providers.

The Black Insurance business model “provides insurance without the insurance company,” Ludlow said Wednesday.

Black Insurance uses blockchain technology to “match capital providers with innovative insurance products directly,” said Ludlow, who was president and CEO of Swiss Re Canada from 2010 until 2014, when she moved to Aviva Canada as president.

Ludlow later became head of insurance investments strategy at the Ontario Municipal Employees Retirement System around the time that OMERS helped Fairfax Financial funds its acquisition of Brit PLC.

The “capital providers” in Black Insurance’s model would be individual or institutional investors, Ludlow said Wednesday during her InsurTechTO presentation, titled Disruption in the Insurance Industry: Are we There Yet?

In the Black Insurance business model, capital would be allocated to risk according to the investor’s risk appetite, Ludlow noted.

“It kind of sounds like a typical insurance or reinsurance quota share deal,” but without a regulated insurance company involved, she explained. “I don’t think it’s as far away as you think but I don’t think it’s a magic wand that tomorrow we will be able to create Black Insurance in Canada.”

Ludlow made that comment after moderator Patrick Vice asked Ludlow where she sees insurance regulation going in Canada.

“We often in this industry use the big stick of regulators generically to say, ‘We can’t move forward because of regulation A, B or C,’” said Ludlow. But Ludlow reported she knows of regulators worldwide being “much more receptive not just to conversations and discussions, but tangible actions about what can and can’t be done.”

She observed an example in Singapore while working for OMERS.

Singapore’s regulator has created a “sandbox” where insurers and other financial services firm conduct business with a new product. The parties with whom the financial services providers are doing business – in that sandbox – know that “they are trying something new in an unregulated environment but with the blessing of the regulator and I think that is a model for many countries around the world including in Canada,” Ludlow said.


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