Evolution of the insurance ledger: from paper, to spreadsheet, to blockchain

March 24, 2020

The insurance ledger has evolved from a manual approach based on paper, to spreadsheet software, to blockchain making entire industries more efficient.

Making a ledger more efficient has evolved: from digitisation, to collaboration within one company, to collaboration across companies.

This article charts the history across the major innovations in this journey.

For Centuries – Paper Ledger

For centuries, there have existed manual ledgers without computer involvement; this is a laboriously slow process to record financial transactions.

The output of several paper spreadsheets provides the input for larger, master spreadsheets.

Changing any of the data in that chain might mean hours of work with a pencil, rubber, and a calculator.

“How computing’s first ‘killer app’ changed everything”, bbc.co.uk

Although a large part of it is digitised, Lloyd’s of London (founded in 1686) still carries out some of its insurance transactions using large binders of sheets of paper representing ledgers and insurance certificates.

1979 – Digital Ledger

1979 was a good year for computing. The first spreadsheet software for personal computers was launched, VisiCalc.

Of course, VisiCalc was not the first kind of any digital ledger, however, the innovation of making a digital ledger into an easy-to-use format for personal computers was the breakthrough for moving towards wider adoption of digital ledgers.

Subsequently, Lotus 1-2-3 was the market leader for much of the 1980s; by the early 1990s, Microsoft surpassed Lotus to become the leader of the spreadsheet market with Excel.

2006 – Cloud Collaborative Ledger

Google brought cloud spreadsheet to the mainstream (Google Sheets),
via an acquisition. Cloud hosting was combined with online collaborative editing.

People – typically working for the same company – could edit the same single instance of a spreadsheet and work together to make edits in real-time. In this way, it was easier to have one up-to-date master copy of a spreadsheet that needs to be edited by multiple people.

2016 – Corda Distributed Ledger

R3 launched an enterprise blockchain, Corda, enables ledger data to be shared by multiple companies. Sharing is a logical concept, not a physical one: Corda is a distributed ledger technology meaning that each company has its own physical copy of a subset of the records.

More specifically on that subset, Corda shares transactions securely and only on a need-to-know basis. Let’s say that there are a hundred companies from the insurance sector on a private network running Corda. If insurance broker B sells a policy on behalf of insurer N, then only these two parties have access to the data of that transaction; the other 98 companies do not receive that data in their respective Corda node.

2018 – Blocksure OS

Blocksure OS launched, building on Corda and sending in real-time the monies due to agents and the insurer, providing the capability to eliminate the bordereau process of ledger reconciliation.

Companies within intermediated insurance – brokers, insurers, MGAs and reinsurers – can collaborate on shared facts within a distributed ledger (Corda) provided by Blocksure OS.

The broker is running a Corda node of Blocksure OS, as is the insurer. Records on insurance policies sold by the broker on behalf of the insurer can be accessed by both companies, hence “shared data”. Such policies have their financial data (premiums, commissions, IPT, etc) and claims data shared.

In Summary (click the image below to zoom)

The ledger has evolved to the point of being able to transform the efficiencies of entire industries, thanks to companies collaborating on a distributed ledger.

This large image is crucial; click the image to view.