Z/Yen Group

Z/Yen Group Limited

41 Lothbury

London EC2R 7HG

United Kingdom

tel: +44 (20) 7562-9562 www.zyen.com

InsurTech Academy

Overview

Professor Michael Mainelli

@mrmainelli

michael_mainelli@zyen.com

December 2016

Z/Yen Group

♦ Enhancing profits – new clients in the uninsured, on

demand insurance, new forms of insurance, e.g.

crops, cyber – and reducing cost, e.g. AML/KYC/UBO

costs,

♦ Reducing risk – client data sharing, aggregate client

and market data and indices,

♦ Increasing certainty – contractual certainty via smart

contracts/sprites, insurance-linked securities

automation, indices automation

Rich Mutual Distributed Ledgers

(MDLs, aka Blockchains)

“…blockchain could help enormously in terms of building

more effective and cost efficient processes” Ashley Hirst, AIG Chief Operating Officer and Chief Underwriting

Officer, 27 July 2016

Z/Yen Group

Mutual Distributed Ledgers (aka blockchains)

& Other New Technology

Z/Yen Group

A collaborative research consortium for

insurers to explore areas of common

interest in mutual distributed ledgers (aka

blockchains) and related new technologies

such as artificial intelligence, internet-of-

things, and big data.

What Is InsurTech Academy?

Four confirmed members since launch in October - diversified

global insurer, global reinsurer, global broker, SME insurer –

discussions with thirty others, linking with B3i for reinsurance

One global bank member

Academy Secretariat – Z/Yen

Academy Sponsor – PwC

Z/Yen Group

♦ ledger – a record of transactions

♦ distributed – divided among several or many, in multiple

locations

♦ mutual – shared in common, or owned by a community

♦ mutual distributed ledger (MDL) - a record of

transactions shared in common and stored in multiple

locations

♦ mutual distributed ledger technology – a technology that

provides an immutable record of transactions shared in

common and stored in multiple locations

♦ blockchain - “a transaction database shared by all nodes

participating in a system based on the Bitcoin protocol”

What Are MDLs?

Z/Yen Group

Where Might MDLs Matter To Insurers?

Z/Yen Group

Is Anything Happening Yet?

03 October 2016 Ten Fintech Start-ups That Are Causing A Stir In Insurance Financial Times

26 September 2016 London's Place At Top Of Financial Centres Ranking Vulnerable Financial Times

23 September 2016 The Right Reaction To The Chain Red - The Magazine from SIX

20 September 2016 Why 'Unhackable' Blockchain Could Revolutionise The Insurance Industry Insurance Post

18 July 2016 UK Parliament To Discuss Potential Blockchain Applications And Central Bank Digital Currency Possibility

EconoTimes

08 July 2016 Blockchain Working Better For Insurers Than Banks, Says Z/Yen's Michael Mainelli IB Times

16 May 2016 Reinsurers Turn To Blockchain Technology Financial Times

09 May 2016 Blockchain: Noch Nicht In Der Praxis Angekommen finanzen.ch

09 May 2016 SWIFT: Blockchain Won't Remove All Third Parties in Securities Trade CoinDesk

26 April 2016 Prof. Michael Mainelli of London's Z/Yen Discusses MetroGnomo Blockchain JV with Alderney Chain-Finance

21 April 2016 Channel Island Alderney Conducts Blockchain Trial with Z/Yen's ChainZy Tech Chain-Finance

14 April 2016 Alderney Blockchain Trial Delivers Timestamps At Almost Zero Cost States of Alderney

23 March 2016 Z/Yen: Clinical Trial Records Move To Blockchain Blockchain News

23 March 2016 Clinical Trial Records Move To Blockchain MondoVisione

19 March 2016 SafeShare Insurance over Blockchain for Shared Economy Businesses NewsBTC

18 March 2016 SafeShare Releases First Blockchain Insurance Solution For Sharing Economy EconoTimes

17 March 2016 Blockchain Insurance Start-Up SafeShare Launches First Blockchain Insurance Solution with Vrumi Blockchain News

14 March 2016 Lloyd's Underwrites First Blockchain Solution for Sharing Economy Insurance Post

10 March 2016 Blockchain, the Technology Behind Digital Currency Bitcoin, Makes a Splash in Insurance to Offer a Solution to Homeowners Renting out Part of Their Property

City AM

23 February 2016 Building Blocks: A History Lesson In Ledger Technology BlockchainBriefing

18 February 2016 Dubai Museum Of The Future Foundation Launches Global Blockchain Council CryptoCoins News

01 February 2016 BAFT Event Attendees See Future With Billions of Blockchains Coindesk

15 January 2016 British Isle Alderney Sponsors Distributed Ledger Project Coindesk

14 January 2016 7 Emerging Trends For Bitcoin and the Blockchain Coindesk

14 December 2015 Blockchain Believers Try To Shake Up Financial Services Financial Times

Z/Yen Group

Why An Academy Collaboration?

Z/Yen Group

“The recommended next step is to identify a group of

firms willing to join a consortium to investigate the

business case for at least one of the potential use cases.

The consortium firms would also work together on areas

of common interest…”

Responding To Demand

Starting with:

♦ Placement and contract lifecycle – documentation

♦ Claims management

♦ KYC/AML

Z/Yen Group

Explore Together How InsurTech Can Enhance

Wholesale & Retail Insurance & Reinsurance

♦ Expanding frontiers - develop and publishing thoughts on common

insurance applications of MDL technology, cognitive computing, big

data, robo-advisors, and the internet of things;

♦ Changing systems - provide evidence-based examples on where

InsurTech does and doesn’t work in wholesale and retail insurance,

and what policies, standards, or other initiatives might speed

appropriate adoption;

♦ Delivering services - standards, common technology bases, training,

and shared demonstrators;

♦ Building communities - engaging wider stakeholders (regulators,

trade bodies, customers, suppliers) through meetings, networking and

events, including conferences and training using collaborative tools.

InsurTech Academy

Z/Yen Group

♦ City of London’s leading commercial think-tank ♦ Services – projects, strategy, expertise on demand,

coaching, research, analytics, systems (MDLs since 1995)

♦ Sectors – technology, finance, professional services

Independent Publisher Book Awards Finance, Investment & Economics Gold Prize 2012 for The Price of Fish

British Computer Society IT Director of the Year 2004 for PropheZy and VizZy

DTI Smart Award 2003 for PropheZy Sunday Times Book of the Week, Clean Business

Cuisine £1.9M Foresight Challenge Award for Financial

£aboratory visualising financial risk 1997

Who Are Z/Yen?

Z/Yen Group

Academy Secretariat

♦ Provide overall programme management,

including the governance process for direction

and guidance on the research programme and

projects

♦ Promote sharing of ideas and mutual problems

♦ Managing events, communications, and

interaction between members, as well as the

core online areas

♦ Recruiting and contracting with members

Z/Yen Group

♦ Mutual distributed ledgers (1995-present)

♦ LIBOR and FX surveillance (2007-present)

♦ PropheZy and VizZy – automation &

visualisation of compliance monitoring

(2002-present)

♦ Prediction markets and bubbles (1998-

present) – www.extzy.com

♦ Market intelligence – Ministry of Defence,

e.g. Vision 2020 (1994-present)

♦ Avatars for Big Data (2010-2012)

♦ Financial £aboratory Club visualising risk

(1997-1998)

Z/Yen Research Consortia Experience

Z/Yen Group

Application:

MetroGnomo – Timestamping & Datalogging

Z/Yen Group

Application:

GeoGnomo – Geostamping

Z/Yen Group

Application:

Clinical Trials

Z/Yen Group

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Application:

Sharing Economy Broker and Underwriter

Z/Yen Group

Application:

Reinsurance Claim Payment Data Sharing

Z/Yen Group

Proof-of-Concept:

IDchainZ - Identity, Health, Qualifications

Z/Yen Group

Proof-of-Concept:

Retail Insurance

Z/Yen Group

Proof-of-Concept:

Wholesale Insurance – Placement

Z/Yen Group

Proof-of-Concept:

XML Document Engine

Z/Yen Group

Academy Sponsor

♦ Support for framing and taking PoC decisions,

and sandbox testing environment

♦ Up to 100 hours of senior expert advice on key

topics and up to 200 hours of research into

specific topics

♦ Shared collaboration infrastructure and access to

Technology Blog, research into different Fabric

Tools and access to lab slack channels

♦ Support communications, marketing and design,

and contribution of facilities for meetings

Z/Yen Group

Near-term Tasks For Secretariat

♦ High-level proof-of-concept, an MDL which handles

generalised document storage, multiple digital signatures,

and secure transmission among selected parties

♦ Definition of high-level functionality for each of the three

target applications, viz. placement & contract lifecycle,

claims management, KYC/AML

♦ High-level business case for each application based on the

benefits accruing versus implementation costs at firm level,

together with the central development costs

♦ Supporting ICT infrastructure that members can share

♦ Such other outputs as the members prioritise within the

initial budget

Z/Yen Group

♦ Usablility

visualisation, apps, XML partial matching engines

key structures, sprites (smart contracts)

♦ Mutuality - validating

validation methods – NPL timing project

‘genetic splicing’ and integrity

♦ Distribution – safeguarding

surveillance – support vector machines, correlation engines

transmitting & receiving, high volumes, multiple transmitters

♦ Immutability - preservation

partial data holding, long-term data storage

standards – inter-governmental research project

Technical Research Programme Outline

Z/Yen Group

♦ Wholesale or retail, insurance or reinsurance – as ‘multi-

organisational databases with a super audit trail’, probably tending

towards wholesale, though KYC/AML is also retail, and spanning

insurers and reinsurers

♦ Resource commitment – ‘quarterly’ cadence, members can contribute

as much as they like, but some staff commitment needed to get value

♦ Technical deep dives from PoCs – platform-agnostic for tech teams,

shared code, training

♦ Intellectual property – completely shared

♦ Location – online, but physical meetings where the members want,

London start

♦ Regulators – Channel Islands confirmed as observers, others

interested such as Financial Stability board, discussions ongoing

Points For Discussion

Z/Yen Group

♦ Mutual distributed ledgers help communities

share information across time and space, less

vulnerable to natural monopolies

♦ Mutual distributed ledgers provide persistent

and permanent ‘contract’ utilities:

safeguarding transactions

preserving transactions & data

♦ Mutual distributed ledger technology will

displace much messaging and shared data

functions

… insurers can explore this collaboratively now.

Closing Thoughts

Z/Yen Group

To join, contact:

Michael Mainelli

Executive Chairman, Z/Yen

michael_mainelli@zyen.com

InsurTech Academy

“Get a big picture grip on the details.”

Chao Kli Ning