R3 continues insurance industry membership, adding North America’s largest life insurer

Another insurance giant has joined the R3 CEV blockchain consortium. MetLife, an American insurance company, is the latest addition to the member list of 60 large financial institutions.

“MetLife will partner with R3 members to explore how blockchain technology can be leveraged in an insurance environment to streamline activities such as new investments management, business processing, policy administration, customer payments and distribution of proceeds.”
— – R3 CEV

Founded in 1868, MetLife, Inc. is the holding corporation for the Metropolitan Life Insurance Company (MetLife), and its affiliates. MetLife was one of the first insurance companies in the world, and has 100 million customers in over 60 countries, making it one the largest providers of life insurance, annuities, employee benefits and asset management.

The company counts over 90 of the top one hundred FORTUNE 500® companies among its corporate clients and is the largest life insurer in the U.S. and Mexico. The company reported total revenue of US$69.95 billion in their 2015 annual report, 55% of which were revenues from premiums.

While MetLife has not publicly revealed any blockchain projects, it has been exploring disruptive technologies. In July 2015 the company launched LumenLab, “the first-of-its-kind disruptive innovation centre for MetLife, and the global life insurance industry as a whole,” according to the announcement.

The 7,800 square feet facility, located in Singapore, is a business incubator staffed full of innovation experts. LumenLab’s main focus is the Asian insurance market, where the company has a strong presence. Its 2015 annual report shows that income from Asia represents 34% of total revenue, second only to its US business. The company expects Asian consumers to account for approximately half of the insurance industry’s growth in the next decade.

“As MetLife’s pioneers for disruptive innovation, LumenLab is charging ahead to create new businesses in health, wealth and retirement […] Through our focus on building new products and services grounded in technology and data, we aim to help people achieve richer and more fulfilling lives.”
— – LumenLab

R3 is a financial innovation firm that leads a consortium partnership of leading financial institutions. The firm collaborates with partner institutions on research, experimentation, design and engineering, and has a team of financial industry veterans, technologists, blockchain and cryptocurrency experts.

The company claims to “help advance technology to meet banking requirements for identity, privacy, security, scalability, interoperability and integration with legacy systems.”

Consortium members and R3 have worked together to develop a proprietary shared ledger platform called Corda, which was launched at a Barclays event in London last April. The platform is designed to “record, manage and synchronize financial agreements between regulated financial institutions” with blockchain technology. R3 filed a patent for software within the platform last week.

Earlier this month, 15 R3 members completed a blockchain trial for trade finance applications using Corda, but the trials have so far been aimed at banking solutions. R3 Founder& CEO David Rutter said that “collaborating with a broad range of non-bank institutions in addition to our extensive banking partners we will ensure the technology being developed in our lab represents the different interests and requirements of the vast array of players in the global financial ecosystem.”

“The addition of a major insurance player such as MetLife is testament to the growing interest in distributed ledger technology amongst the non-bank financial services community.”
— – David Rutter, R3 Founder& CEO

However, MetLife isn’t the first insurance company to join R3. Ping An Insurance joined in May, and was the first Chinese institution to join the partnership.

Founded in 1988 and headquartered in Shenzhen and Shanghai, Ping An currently has approximately 870,000 life insurance sales agents, and 275,000 full-time employees. According to their website, both Ping An Life and Ping An Property & Casualty ranked as the second-largest insurance companies in China by premium income in their respective sectors. The Group’s consolidated total assets were ¥4.77 trillion 0.71 (US$710b) as at December 31, 2015.

"We are excited about joining R3 and look forward to developing and using blockchain technology to create a more efficient way of managing financial assets digitally end-to-end," Ping An Group Chief Operating Officer, Jessica Tan, said in the announcement.

The largest independent publicly listed pan-Asian life insurance group, AIA Group, joined R3 in June. AIA has a presence in 18 Asia-Pacific markets, assets totaling US$168 billion as of November 2015, and serves more than 29 million individual policyholders. “Distributed ledger technology or blockchain offers significant opportunities to the life and health insurance industry,” Simeon Preston, AIA’s Group Chief Operations Officer, commented at the time.

“R3 provides us the possibility to understand together with other leading global organisations in financial services the potential applications of blockchain technology around the world and particularly in the Asia-Pacific region.”
— – Simeon Preston, AIA Group Chief Operations Officer

The wider insurance industry has been named as one of many key industries that could benefit from blockchain technology. Earlier this year, Deloitte published an independent report on the application of blockchain technology in the industry.

The multinational professional services firm outlines various ways blockchains can help transform insurance. For example, smart contracts using a blockchain can provide claims transparency and increase efficiency for both customers and insurers.

Everledger is already exemplifying the technologies adoption in the industry. The company uses the bitcoin blockchain to record large amounts of data about diamonds. "This ledger allows insurers (as well as potential purchasers) to check the history of any individual stone, including previous claims that have been made, helping insurers prevent, detect and counter fraud,” Deloitte confirms.

“Adopting a common blockchain across the sector could create a step-change in value in the insurance industry: claims-handling could become more efficient and streamlined, resulting in an improved customer experience.”
— – Deloitte

McKinsey & Company published a separate report on the topic in July. The company cites various potential blockchain use cases, including innovating insurance products and services, increasing effectiveness in fraud detection and pricing, as well as reducing administrative cost.

The firm concluded by urging insurance industry players to explore the technology in collaboration “with consortia, technology experts and start-ups, regulators, and other market participants.”

“Blockchain is a technology ready for exploration by insurers. But its exploitation is still a long way off,” writes McKinsey & Company. “Now is the best time for the insurance sector as a whole and for individual insurance players to further investigate the blockchain technology and its potential.”

“As an innovative technology, blockchain presents a threat for incumbents in the form of innovative business models and/or cost advantages. But, there is a range of options to counteract this threat by adopting the way of working of start-ups, partnering with, or acquiring them. Key to shaping the future of the blockchain insurance ecosystem is getting involved in partnerships and industry activities early on.”
— – McKinsey & Company