Commercial & Product
A blockchain can be used to store any digital record, whether data, images or contracts. Uses range from records of transactions to recording images, or digital keys that are hashes of images, to prove authenticity.
In practical terms, the most efficient use of a blockchain is to minimise the size of each record in a block and to use a structured schema.
Due to the fact that schemes will have various parties involved and a number of links in the process, blockchain and distributed ledger technology (DLT) is ideally suited. DLT and blockchain remove the need for bordereaux and simultaneously connects all relevant parties in the relationship. What may have taken months can now be processed accurately, securely within seconds and with a full audit trail.
These products will be predominantly white labelled, and the Blocksure logo will be visible as part of a “powered by Blocksure OS” statement
How can distributed ledger technology help solve the problem of fragmented databases of different parties?
For insurance the distributed ledger solves two big problems.
The first is the transfer of policy and claims data between interested parties. Currently these parties need to keep their own set of records that keep track of what risks they are liable for. Even organisations that use a trusted intermediary keep their own copy of these records. With a distributed ledger there is one golden source of data that everyone uses, and one way that data can be modified (defined in smart contracts), so there is no need to maintain separate systems.
The other big benefit of distributed ledger is frictionless, real time payments that are much cheaper than on traditional payment systems. These combined benefits result in significantly lower operating costs for insurers and the opportunity to introduce new products.
The ‘shape’ is determined by the specific insurance contract – for example a Quota Share has a different ‘shape’ to an Excess of Loss contract.
A standard contract shape for each type of product/risk category will be developed as required, and be reused for other customers i.e. products developed for one market/customer will be reused (although some modification may be necessary from one jurisdiction to another).
Blocksure Ltd is an InsurTech company building a distributed ledger platform for the insurance industry. Its focus is on Intermediated Insurance business and the principles underpinning the business are Simplicity – Efficiency – Resilience.
For more information on Blocksure Ltd, please visit our website.
Blockchain is a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network.
A more technical definition is that a blockchain consists of records (let’s call them “blocks”), which are linked using cryptography. This chain of blocks grows over time, as more transactions are added. Each block contains a cryptographic hash of the previous block, a timestamp, and of course the transaction data itself.
From this, we can observe the following properties. (As you read this list, reflect on how such properties could benefit your business.)
Data is immutable: if a malicious party tampers with a record (i.e. modifies an existing record) then it will be rejected by the network.
Irrefutability of transactions: data is signed by the owner of a private key. Nobody else has a copy of that private key, therefore, that solitary owner cannot later claim to have not authorised a transaction that had been signed with that key.
Distributed ledger technology (refer to our FAQ on that topic)
There is a connection between cryptocurrencies and blockchain, due to the early years of its development a decade ago and the subsequent Bitcoin phenomenon. Since then, blockchain has flourished across many industries with use cases across all value chains. Big names have been involved in building products across the globe including – IBM, BMW, Zurich, Allianz, Covea and many more are exploring opportunities.
Encryption is the process of converting information into an unreadable stream of data that can then be safely stored or transmitted without allowing unauthorised access.
Transactions run on a distributed ledger technology (DLT) network such as Corda are encrypted such that only the parties that are involved with them can see the data.
Distributed ledger technology (DLT) is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions.
Firstly, a key point is that data does not reside in a single, centralised database: instead, data is distributed across the nodes of the network. A peer-to-peer network is required as well as algorithms that define a mutually agreed approach for validating and accepting data, to ensure that data can be replicated across the nodes of the network.
Secondly, there is not a single, centralised administrator; therefore, network participants have the ability to manage their own nodes.
Blockchain is a specific type of distributed ledger technology.
A distributed ledger is a database that is shared and synchronised over multiple sites. The ledger contains records of contracts and transactions that have each been agreed by consensus. The consensus mechanism is based on a mutually agreed approach using defined algorithms that ensure that all data is validated and accepted at the time of transaction.
This means that transactions are simultaneously written to the ledger of each party to the transaction. The transaction details in each ledger are identical and provide a trusted record of the transaction. Each party to the contract can be certain that the records and balances they are looking at are always in agreement with the records of their counterparties. This eliminates the need for reconciliation between parties to a transaction.
When using a traditional ledger, each party maintains its own records of a transaction in their own ledger. While each ledger system may be internally consistent, they are completely independent and no party can assume that a counterparty has the same view of the same transaction. This means that statements issued by one party to another must be checked and reconciled before it can be agreed.
A node is the piece of software run by each participant of the network to share, verify and store transactions. In a simple Blocksure OS transaction involving a broker and insurer, both parties would have their own node.
Immutability means that a record, once written to the blockchain, cannot be edited without breaking the integrity of the chain. Each block refers to its predecessor by a digital key generated from its content. If the content of a block is changed, its digital key changes and it no longer can be referenced by the subsequent blocks.
Any attempt to edit a blockchain record is immediately detected by the system and rejected.
Regulatory & Compliance
Blocksure is a technology provider, not a regulated intermediary or insurer. Our partners are regulated, and we provide technology solutions that allow them to maintain and even improve compliance.
Management of digital identity within the DLT is a core component of the Blocksure architecture. Data security and privacy is intrinsic to the design, preventing unauthorised access.
In response to the right to be forgotten of GDPR, the embedding of identity keys in each data element can allow them to become inaccessible if the key is withdrawn
Customer data. Where is this held? EU privacy laws? Is customer data stored with policy and claim data on the blockchain?
Customer data is held in a secure data store that is owned by each party. The data store is in the cloud, in a specific location, and is compliant with EU privacy laws. Access to it made dependent on authorisation.
Blocksure OS is GDPR compliant and meets the eight core tenets of GDPR. No personal data will be stored on the Blockchain. For other territories, outside the EU, we will adhere to local data storage requirements.
A node can run anywhere that has access to the internet, be it in your company’s data centre, or hosted in cloud platforms such as Google cloud, AWS, Azure, etc.
Blocksure OS is supported by Blocksure Ltd, with technical support provided as standard. Our support team can be contacted by support tickets raised via Surelink and have an excellent record of customer satisfaction.
For your node on the network, you can choose from:
- your node being managed by Blocksure Ltd, or
- you managing your own node
No knowledge of blockchain or distributed ledger technology is needed for either option.
The first option is suited for companies that lack dedicated IT departments, for example small brokerages. With this option, Blocksure staff manage the hosting and future upgrades for you.
The second option is for companies who have their own IT operations staff and wish to manage their own node. Blocksure provides the code for your company to run on your node. We include a step-by-step training guide to getting started, hands-on guidance from Blocksure staff to get set up and a monitoring console for your node. Your IT operations staff only has to become familiar with our tools; our tools take care of the rest, therefore knowledge of blockchain is not required.
In a simple Blocksure OS transaction, the node that would like to change the data (initiator node) will assemble the different pieces of data into a transaction, including old data that will be replaced as a result of this transaction. It then sends it to the parties relevant to that data. Those parties will then independently verify the transaction contents and sign it to show their approval. Finally, a special node known as a ‘notary node’ will perform additional verification on the data, before signing itself, sending it back out to all participants who will then update their copy of the data.
Blocksure OS is developed on Corda.
Blocksure OS was originally developed on Ethereum and we moved to Corda as it provides a better enterprise platform.
Blocksure OS contains a set of smart contracts written in the Kotlin programming language that are used to persist and share product, identity, policy, claims and payment data. The smart contracts also define data ownership and access control (who is allowed to view/edit/delete data).
A consensus mechanism is a system to ensure that data added to a distributed ledger is valid. There are multiple different forms of consensus mechanisms.
One of our clients asked us:
“If in the future there would be a superior new distributed ledger technology (DLT), how much effort would it need to migrate to it, or would this be nearly impossible?”
Blocksure has experience of this, having completed a similar migration early in the product’s life when the move was made from Quorum to Corda.
Any DLT migration would require careful consideration and effort estimation. The main complexity would be determined by how much of the core DLT logic (code which resides within the DLT node itself) could be moved to the new platform and if the Corda “flows” could be made to behave the same way in this new platform. The core business logic for the platform is kept separate to the Corda specific parts.
That said, at Blocksure, we are delighted with Corda and have no plans to replace it! The context of our summary is simply responding to a client’s question.
As a wider point, we highlight that clients own their data, not Blocksure. Blocksure clients are able to extract their data at any time via Blocksure’s APIs, which:
- exports data in XML, JSON or CSV file formats,
- uses SFTP or HTTPS transport protocols, and
- has a configurable number of records per export file.
If you would like to ask us a question for us to answer, potentially for inclusion on this FAQ page, please contact us.