Allianz Risk Transfer AG (ART) and Nephila Capital Limited (Nephila) have successfully tested blockchain smart contracts for transacting natural catastrophe swaps.

According to the companies’ statement, the test run has shown the ability of blockchain technology to “significantly accelerate” the transactional processing and settlement between insurers and investors, as well as to “increase tradability of cat bonds.” The companies also expressed a belief that there are “even wider opportunities to apply this technology in other insurance transactions.”

“Blockchain technology would increase reliability, auditability and speed for both cat swaps and bonds as less manual processing, authentication and verification through intermediaries is required to confirm the legitimacy of payments/transactions to and from the investors,” said Richard Boyd, Bermuda-based Chief Underwriting Officer of ART.

With every validated contract containing data and self-executable codes, the smart contract infrastructure has all the potential to facilitate contract management process of cat swaps and bonds.

“By replacing the human interventions which are currently embedded throughout the entire risk transfer process, frictional delays and the risks of human error are completely removed – with a radical effect on the speed and efficiency of the process and, in the case of bonds, on the tradability of such securities.”

ART and Nephila have invested “a great deal” to develop a variety of insurance use cases of the blockchain, joining their efforts with a few other companies to work out a proof of concept for such spheres as facilitating payment processes in international fronting for captive insurers.

“In our journey to become more digital, Blockchain promises to help us create more transparent, more convenient and faster services for our customers. Blockchain is obviously a fascinating technology and we are starting to explore the use of it in several fields,” said Michael Eitelwein, Head of Disruptive Technology of Allianz Group.

Allianz Risk Transfer AG (ART) is a wholly owned subsidiary of Allianz Global Corporate & Specialty SE operating through affiliated companies with offices in Amsterdam, Bermuda, Dubai, London, New York and Zurich. Nephila Capital Ltd. is an investment manager specialising in reinsurance and weather risk.





Maria Rudina