The shared ledger technology is going to be a game changer for many industries. Here’s why.
In a development that underscores the growing penetration of bitcoin technology, the American International Group Inc (AIG) has partnered with International Business Machines Corp (IBM) to develop a “smart” insurance policy which will use blockchain technology to manage complex international coverage, said both companies on Wednesday.
Already AIG and IBM have completed a pilot project called “smart contract”, which uses blockchain’s digital ledger technology, for Standard Chartered Bank PLC, which they claim to be the first of its kind.
The Standard Chartered Bank’s project uses blockchain technology’s shared ledger feature to communicate information in real-time across countries.
Financial institutions, large banks and investors have sunk in millions of dollars in blockchain technology so as to make transactions easier, faster and more secure.
IBM has partnered with leading companies across industries, including Danish transport company Maersk, to create blockchain-based products that can streamline complex international dealings across sectors.
Multinational insurance coverages are often a hassle and cumbersome due to the mountain of paperwork, varying terms of payment and the maze of international regulations.
“There’s a lot of back and forth and it’s all through email chains going around the world, instead of a centralized system,” said Carol Barton, President of AIG Multinational in an interview.
Thanks to bitcoins shared ledger technology, a master policy can be issued in the country where the company is headquartered, while its affiliates can access the terms of the coverage, including payment terms, documentation and rules, in whichever country they are based in.
The real-time system allows companies, their units, and insurers, among others, to simultaneously share all data and documents about the policies, said both companies.
The system also notifies all of those involved in the payments.