As time passes, more and more companies are beginning to showcase their interest in blockchain technology, thus looking for new ways to take advantage of it.

According to recent reports, it seems like Allianz, an international insurer based in Europe has joined forces with Nephila Capital, an investment manager to test out blockchain technology in the case of catastrophe bonds.

To put things better into perspective, Catastrophe Bonds, also known as CAT are a high-yield debt instrument that is often linked to insurance, meant to help raise money in the unfortunate case of a catastrophe, including, but not limited to earthquakes, flooding or hurricanes. Unlike normal insurance bonds, CATs have a special condition stating that if the insurance company suffers any sort of loss from a list of pre-defined catastrophes, they will no longer be required to pay their clients.

In a joint statement, released by the two companies, it was stated that the test run has managed to demonstrate the fact that blockchain technology can significantly accelerate the process of settling payments between investors and insurers. This is achieved by making third-party verification obsolete, thus ensuring more secure and faster transactions, considering the fact that it now takes weeks to months to issue CAT bond payments.

Allianz went ahead and emphasized on the fact that discussions need to be started with regulators as soon as possible, to define clear ways of using the technology.

Based on everything that has been outlined so far, what do you personally think about Allianz experimenting with blockchain technology for Catastrophe Bonds? Let us know your thoughts in the comment section below.

Source: Reuters

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