Norton Rose Fulbright and R3 launch white paper on application of blockchain and distributed ledger technology in the insurance sector

Global Publication July 2017

As a sector, the insurance industry is particularly well placed to benefit from distributed ledger technology and applications enabled by it, such as smart contracts.

The automation and digitization of the insurance value chain through these technologies has the potential to lead to value creation through the development of innovative new products and new business models, which could prove revolutionary to the industry.

Digitizing the insurance value chain through the use of blockchain or other distributed ledger technologies (DLTs) has the potential to revolutionise the insurance sector, according to a new whitepaper prepared by global law firm Norton Rose Fulbright in association with financial innovation firm R3.

The Norton Rose Fulbright-R3 white paper illustrates potential use cases for DLTs in the insurance sector and examines the legal, regulatory and commercial factors that the industry should consider before deploying such technologies.

Macroeconomic factors, regulatory requirements and a soft market have focused insurance market participants on investing in new and developing technologies (including DLT) with the aim of reducing costs, increasing competitiveness and profitability, and improving customer experience.

Insurance value chains involve multiple market participants who share and transact on the basis of a huge amount of data. A significant industry issue is the maintenance of multiple records of the same data within the same business for use in different aspects of the lifecycle of the insurance of the same underlying risk or book of business. This data requires reconciliation and verification. DLT has the potential to remove the inefficiencies associated with reconciliation and verification of siloed data by facilitating shared control of transaction specific data which is available to all (or selected) participants in the relevant network and can be updated almost in real time.

When combined with smart contracts and information fed into the distributed ledger by IoT (Internet of Things) devices and other open data sources, DLT can automate and streamline significant parts of the insurance value chain, from the acceptance of risk through to policy administration, payment of claims and regulatory oversight. This level of automation will reduce inefficiency and error and has the potential to lead to an improvement in customer outcomes, through more responsive insurance products with a higher degree of certainty of outcome.

Perhaps as exciting as the benefits of digitizing the value chain through DLT and smart contracts, is the potential for innovative new products and new business models to be developed, which could prove revolutionary to the industry.

To realize the true value of DLT and DLT-enabled applications across the insurance industry, those looking at the technology must avoid getting drawn into a siloed approach. Incumbent insurance players will need to collaborate with technology firms and other organizations. Collaboration with regulators will also be necessary to ensure that regulatory frameworks evolve in step with the direction of travel of the industry.

Nicholas Berry, partner in the London corporate and regulatory insurance team from May 1, 2017, commented: “We are delighted to publish this white paper on distributed ledger technology use cases in the insurance sector in association with R3. Distributed ledger technology itself, and as an enabler of other complementary technologies, has the ability to revolutionise insurance products and services and the way in which insurance business is transacted. The shift in thinking as industry players open their minds to ways in which traditional market processes can be transformed through new technologies is gathering momentum.”

Sean Murphy, Global head of the distributed ledgers, blockchains and smart contracts practice at Norton Rose Fulbright, said: “Because the insurance sector is characterized by legacy systems that are expensive to maintain, distributed ledger technology raises the prospect of being able to implement transformational business change in the sector while at the same time achieve cost savings. The insurance sector is but one of a number of sectors where the technology could have this impact.”

David Rutter, CEO of R3 commented: “Distributed ledger technology (DLT) has enormous potential for the insurance industry, not least to change the way insurers manage and utilise data. R3 now counts a number of insurance companies amongst its member base and we are exploring and developing applications that improve the efficiency of insurance processes such as claims handling and premium payments. In order to further our efforts, we recently launched a Centre for Excellence for DLT in partnership with ACORD to encourage knowledge sharing and collaborative working amongst the global insurance industry.”

To request a copy of Unlocking the blockchain: Digitizing the insurance value chain please contact


Global head of FinTech

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