Since 1980, the United States has suffered more than 250 extreme weather disasters causing more than $1 billion damage each. Every time a natural catastrophe strikes, state regulators quickly ask insurance carriers to send them data about the affected properties. This data helps regulators model risk, monitor market activity, protect consumers, and plan for future emergencies.
These ad-hoc reports come on top of routine quarterly and annual statistics that insurance carriers must provide to regulators. But the reporting process was flawed. Insurers could barely keep up with the requests for data, in various formats and often with short deadlines, coming in from 50 different state regulators.
As a national, not-for-profit member association that gathers, aggregates and anonymizes data from its property and casualty (P&C) insurance industry members to inform legislative policy, Chicago-based American Association of Insurance Services (AAIS) saw the reporting problems first hand. In fact, everyone in the industry saw the need for a more resilient and efficient resource: a system that would yield data to inform policymakers and also help carriers operate efficiently and the platform to compete and innovate in the marketplace.
AAIS invited carriers and regulators to brainstorm a solution they could build and deploy to address the industry’s data problem. As discussions progressed, the group raised the idea of using blockchain. And, to address the cost concerns, using open source software. By starting with an existing open source framework, AAIS wouldn’t have to code a blockchain platform from scratch. The team could get on with building the higher-level components and interfaces for their system, which they named the Open Insurance Data Link (openIDL).
That led to the choice of Hyperledger Fabric. After AAIS picked a blockchain platform, it needed a development partner with all the skills and resources to bring openIDL to life. The team decided to partner with IBM because of the organization’s track record with Hyperledger Fabric and their expert team. With shared philosophies that included design thinking and agile development, AAIS and IBM developed and tested a prototype in record time. With the first prototype, they were able to test five million records in less than 90 days.
In 2018, openIDL went into production as the first blockchain network connecting data across the American insurance industry. Insurers have the option to manage their own node or use the multi-tenant environment managed by AAIS. And, to help insurers spin up their own nodes, IBM created openIDL in a Box: a managed service offering everything an insurer needs to join the blockchain network.
Hyperledger worked with AAIS to document key steps in engaging stakeholders in planning openIDL and building a network that ensures data privacy for insurers and reporting for regulators. Read the full case study here for more on the design process, solution architecture and next steps for openIDL.