Financial innovation firm R3 has partnered with ACORD (Association for Cooperative Operations Research and Development) to launch a Centre of Excellence for distributed ledger technology (DLT) in the global insurance industry.
R3 counts a number of major insurance companies amongst its member base, including MetLife, AIA and Suncorp Group, as well as other financial services members that have their own insurance groups. ACORD is a non-profit organisation that provides the global insurance industry with data standards and implementation solutions.
The Centre of Excellence will provide a dedicated environment for both R3’s members and ACORD’s members to research, experiment and design DLT applications that improve the efficiency of insurance processes such as claims handling and data management.
R3 will provide access for ACORD’s members to the R3 Wiki, a vast online knowledge library that contains a collection of research and resources created and compiled by R3 and its members. A dedicated portal has been built on the Wiki specifically for insurance projects, enabling ACORD members to engage in discussion amongst themselves and with other members of R3 on DLT and insurance related topics.
R3 will provide education for C-suite, management and technology communities within ACORD’s membership, as well as engaging in regulatory outreach within the insurance industry. ACORD will have the ability to invite appropriate regulators and supervisory bodies into projects being carried out within the Centre of Excellence.
R3 has actively engaged with regulators, trade associations and government entities across the world since its inception, inviting them into relevant trials with its members and enabling them to observe and participate in developing elements of DLT it is testing and building.
David Rutter, CEO of R3, commented: “R3 is building distributed ledger technology for use across the financial services industry, of which the insurance sector is a key component. There is huge potential for insurers to leverage this technology to overhaul outdated systems used for processes such as premium payments and claims handling. We have been steadily growing our member base in this sector, and our partnership with ACORD will now provide these institutions and the industry as a whole with the tools and network to foster knowledge sharing and experimentation.”
Bill Pieroni, President and CEO at ACORD, commented: “We are excited to partner with R3 to create the DLT Centre of Excellence for the global insurance industry. It gives ACORD’s members the opportunity to learn from other financial sectors, leveraging the knowledge to reduce time, cost, and risk associated with proof-of-concepts and pilots. Likewise, the work carried out by ACORD and R3 will benefit R3’s member base as a whole. ACORD looks forward to working together to strategically position the industry for change.”
Marty Lippert, Executive Vice President and head of Global Technology & Operations at MetLife, added: “The partnership between ACORD and R3 to create a Centre of Excellence for insurers and reinsurers will expedite innovation and establish global standards for distributed ledger technology across the insurance industry. MetLife looks forward to expanding its strong relationships with both ACORD and R3 and contributing to the efforts of the new Centre of Excellence.”
Todd McDonald, Co-Founder and Head of Ecosystem Development at R3, comments: “Smart contracts present Corda users with an opportunity to significantly improve the efficiency of their financial and legal transactions. As a member of ISDA, we fully support its efforts to lead the work on industry standards for smart contracts. Interoperability was a key consideration when developing Corda with our large member base of banks and other financial institutions, and ISDA’s work will help facilitate a world of frictionless commerce for smart contract users around the world.”
Lee Braine, Investment Bank CTO Office at Barclays, comments: “Many banks are looking to rationalise and simplify their operating platforms. Smart contracts can potentially support this aim, with the support of common industry standards covering legal agreements, data structures, and processes. We are therefore collaborating via trade associations, such as ISDA, in the development of such industry standards with the expectation that they will provide a solid base upon which FinTech innovation could thrive.”
Clive Ansell, Head of Market Infrastructure and Technology at ISDA, comments: “The industry recognises there is a need for change, because the current approach is unsustainable and not scalable. We are at a critical juncture, driven in part by the emergence of new technologies. ISDA is committed to working with its members and the broader industry to deliver the necessary foundational components to facilitate the required transformation. We all need to be bold to ensure the future efficiency and vitality of this market.”
Emmanuel Aidoo, head of the distributed ledger and blockchain effort at Credit Suisse, comments: “The challenge is to leverage the consistency and lineage strengths of distributed ledger and smart contract platforms, while avoiding unsuitable past designs. Success will be underpinned by our ability to design for maximum coverage with minimum code, capitalising on underlying similarities across products and functions rather than the fragmentation that currently exists.”
Daniel Franks, a derivatives partner at global law firm, Norton Rose Fulbright, comments: “The types of legal issues that arise in this context are just as varied as the number of DLT/derivatives use-cases. The single legal aspect that is consistent across all use-cases, though, is the need for the technology to work with the documentation. The immediate focus is to identify which aspects of the industry documentation can suitably be coded, and to ensure that the technology works with those aspects of the documentation. In time, as the technology becomes more established, the focus will shift to determining whether other aspects of the industry standard documents can be adapted, without losing their commercial rationale, so that they are even better suited to the capabilities of the technology.”