China Life is an industry leader in China’s life insurance industry, with a registered capital of nearly $4.12 billion. It has been a pace-setter in China’s life insurance market and is known as the “mainstay” of China’s insurance industry. In 2022, China Life registered a premium income of nearly $89.57 billion. Reinsurance plays an important role in supporting high-net-worth individual and corporate customers, as well as stabilizing company operations.
This project takes the cutting-edge blockchain technology as a bridge to establish a new mode of reinsurance interaction between China Life and China Re (the leading reinsurance company in China). We established a reinsurance blockchain platform to meet the rapidly growing demands of reinsurance business and overcome the challenges of data transmission in regard to scale, frequency, transmission efficiency, storage efficiency and security. It will effectively improve both the quality and efficiency of reinsurance transactions. It will optimize the experience of high-net-worth individual customers and corporate customers as well.
Beyond the collaboration with China Re, we aim to attract over 40 domestic and foreign reinsurers to join the blockchain platform. It will further help to build a new industry ecosystem, and expand the application scope of the platform. In the future, we will promote the platform to the globe step by step.
Facultative arrangements are usually needed for high-net-worth individual and corporate customers, which became the first application put into production on the reinsurance blockchain platform. (Facultative reinsurance refers to when an insurance company seeks support from a reinsurance company on single policy with high sum assured and/or high risk life insured that exceeds its underwriting capacity). Since the launch of the platform, it has supported nearly $440 million business underwritten involving nearly 20,000 customers from April 2022 to March 2023.The project creates value mainly in the following ways.
1.Efficiency Improvement
* Before: There were up to 12 steps in reinsurance business processing cycle. It was hard to keep transaction-parties updated in real-time, which resulted in inefficient communication and process. In the past, it usually took one day to deal with reinsurance business.
* Now: Each step can be clearly displayed on the platform. Once there is a change, all the transaction-related parties can be notified on the progress in real-time, which improves business communication and processing efficiency. Nowadays, it only takes two hours to deal with reinsurance business, which saves over 90% time-spent.
2.Security Enhancement
*Before: Data transmission was mainly done through e-mail, which carried the risk of data corruption or tampering. The security of the data needed to be improved.
* Now: With blockchain as a shared distributed ledger, data can be encrypted. It cannot be identified by institutions outside the transaction, which prevents data corruption caused by single point or local failure. It also prevents data tampering, further enhancing the security of reinsurance data.
3.Trust Enhancement
*Before: When a large claim was reported, communication between reinsurers and insurers usually took a long time, which affected the effectiveness of claims settlement.
* Now: Once a large claim was reported, historical records could be traced and presented on the blockchain platform, which reduces communication time and improves claims settlement efficiency.
4.Standardization Reinforcement
*Before: Less standardization of data transmission resulted in some reinsurance files being returned and longer underwriting period for high-net-worth individual and corporate customers.
* Now: Adding in key fields. With the requirement of data integrity and accuracy, communication between insurers and reinsurers can be more effective.
5.Information Transparency
* Before: Traditional communication was mainly conducted through e-mail or telephone. Reinsurance slips provided by reinsurers had to be input manually, which made reinsurance business complicated. It was difficult for trace-back later as well.
* Now: Transaction-parties could communicate through the blockchain platform in real-time. Communication records and project data are preserved completely. Processing flow can be traced and searched on the platform, which makes it clearer and more transparent.
Phase I of the reinsurance blockchain platform has been put into production, and Phase II is currently under construction. It is expected to be launched this year with more features, such as reinsurance quotation, reinsurance bill signing, etc.. In the future, we will further improve the platform in following two aspects.
1.New Application Scenarios
Blockchain technology will be introduced into the whole life cycle of reinsurance business. It will be integrated with the front-end, middle-end and back-end of reinsurance business.
a) Reinsurance treaties can be signed on the platform.
b) Large claims can be reviewed on the platform.
c) Reinsurance settlements can be finished on the platform. More features can be expected in the future.
2.Expansion on the Scope of applications
We will attract more local and foreign reinsurers, to join the blockchain platform. Our goal is to be the leader in building blockchain digital ecosystem. In the future, we will expand the application scope to the globe step by step.
