Blockchain could save reinsurers $10bn in costs: PwC

Reinsurers are in line to build some of the biggest blockchain applications outside the payments sector with the potential to save $5 to $10 billion in costs, says a new report from PwC.

PwC’s report shows that blockchain technology has huge potential to transform the reinsurance industry, given the volume of data flowing between clients, brokers, reinsurers and outsource service providers.

PwC estimates that, by simplifying reconciliation and multiple data entries, blockchain solutions could remove 15 to 20 percent of expenses from the reinsurance industry, delivering $5 to $10 billion of savings.

The report shows that blockchain technology can speed up claims processing verification. It can also allow primary insurers to cede/retrocede risk using an application specifically designed to process treaties and notify all parties and process premium and commission payments.

The report says some of the advantages of blockchain in reinsurance will include removing task duplication; supporting entry into new markets including the catastrophic swap market; and enhancing transparency.

Stephen O’Hearn, PwC’s global insurance leader, said: “Blockchain technology is still a new and uncertain area for reinsurers but those who are able to quickly build, assess and refine their applications will differentiate themselves.

“At a time when companies are searching for cost savings, the potential of blockchain to vastly improve efficiency and accuracy cannot be ignored.”