Financial innovation firm R3 demonstrated the application of blockchain technology in insurance and reinsurance sector at a presentation during the ILS Bermuda Convergence conference this month, The Royal Gazette reported.

Brokers, insurers, reinsurers and financial services organizations attended the demonstration. Speakers included Tim Grant, chief executive officer of R3 Lab and Research Centre, and consultant Todd Bault. David Rutter, CEO of R3 also attended the event.

The second day of the conference featured a real-time demonstration by a small team from R3, which explained how distributed ledger technology (DLT) can potentially be used by companies in Bermuda.

Stafford Lowe, head of human capital management at R3, said that there were brokers, underwriters, Bank of New York Mellon, which is a big trustee, the Bermuda Monetary Authority, people from underwriting to operations on the reinsurance side, as well as from the advisory companies.

“We wanted to take an industry loss warranty on a real ledger. So we had a broker screen, an underwriter screen, and a trustee’s screen. We followed it through the process and saw the numbers change on everyone’s screen. This was a representation of three people’s very separate views on things”, Lowe said, as quoted by The Royal Gazette. “But the most important thing was that whenever an action was performed you saw something get written to the ledger. That really resonated with people. It was a real example. It was designed to be a starting point. This was something we knocked together in two weeks; imagine if we built this thing together, and where we could get very quickly.”

At the conference, R3 aimed to demystify blockchain, crystallize what the company does and how the technology can be applied, Lowe said. He explained that R3 was formed to become a “centre of gravity” for distributed technology expertise “and a facilitator to the financial services industry in coming together to figure out how they are going to re-engineer their businesses”.

Recently, two member banks left the R3 blockchain consortium – Goldman Sachs, which was one of the founding members of the consortium, and Santander, which joined R3 in December 2015. Moreover, reports suggest that more members are likely to follow suit, as R3 seeks to raise $150 million from consortium members in the first round of equity funding.

However, Lowe is confident that the number of consortium members could easily double within the coming year, with the increase in the possibilities for the blockchain technology.

“There are a handful of reinsurance companies here who are genuinely interested in what we are doing. We hope they join R3, and see this as an opportunity to gather the Bermuda market together as a global statement of intent to remain at the leading edge of the industry,” he said. “New technologies like this are going to be built collaboratively, and Bermuda has always been a wonderful place for collaboration.”

Lowe said it was difficult to predict when there will be an “enterprise grade solution” using DLT, but expects some specific areas of technology to go into production in the next few years.