According to Alliantz, the use of blockchain technology could cut down delays in the case of cat bond payments between insurers and investors when natural catastrophe happen, because the agreements can be executed automatically via the blockchain when a set of predetermined conditions are met.
The test run showed that processing and settlement of payments between insurers and investors could be significantly accelerated and simplified by blockchain-based contracts.
Blockchain works as a tamper-proof ledger that is able to facilitate and process transactions, as well as other transfers of data, with no need for third-party verification.
Blockchain also makes sure that the digital contract ownership cannot be duplicated or forged, which would boost public trading of catastrophe bonds, Allianz said, adding that it would now develop a more detailed business case and involve other financial partners, according to reuters.com.
Blockchains proponents say it has the potential to disrupt financial markets by making payments and the settling of securities transactions cheaper.
In June 2016 the European Securities and Markets Authority (ESMA) said it was too early to form a definite opinion of the technology and that companies planning to use blockchain should keep the existing regulatory framework in mind.
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