Ten years on from the first mumblings of sector innovation, experts are again asking whether blockchain will rewire reinsurance.
Almost a decade after a burst of excitement about blockchain in (re)insurance, interest in the technology is stirring again. Blockchain’s earlier moment began in 2016, when a band of leading global (re)insurers launched the Blockchain Insurance Industry Initiative (B3i) consortium.
It reflected high hopes about its ability to address industry cost challenges stemming from antiquated and convoluted distribution processes. The technology was seen as a means to widen access to insurance, and even a solution to the global protection gap.
Across the sector, consultants were deployed, papers were written, and start-ups formed. A year later, B3i completed its first product, a blockchain prototype for property catastrophe insurance, and in 2018 the consortium became a company. And then, the hype ceased, the industry moved on, and in 2022 B3i filed for insolvency.
Now, three years on, blockchain is making a comeback, with a focus on using smart contracts on the distributed ledger to turn slices of reinsurance contracts into investable assets.
The backdrop to all this is wider financial services interest in tokenisation, which has garnered the support of the mighty BlackRock, and seemingly SEC chairman Paul Atkins, who recently compared the migration to on-chain securities to the digital audio revolution in the music industry.
Elsewhere, the soaraway success of platform company Circle Internet’s recent IPO demonstrated investor faith in the possibilities of tokenisation. Circle, which sees the entire global monetary supply as its addressable market, predicts the role of digital assets in the financial ecosystem will continue to grow beyond the $3.3trn that CoinMarketCap estimated as of 2024. McKinsey, which excludes cryptocurrencies from its forecast, predicts a tokenised market cap of around $2trn by 2030.
It’s fair to say that few see the (re)insurance sector as part of the tokenisation vanguard. But make no mistake, things are happening.
Where to look
An early mover among established carriers is Hannover Re, the world’s third-ranked reinsurer, which in 2024 conducted a successful tokenisation pilot with Schroders Capital overseen by the Guernsey Financial Services Commission.
The pilot enabled reinsurance contracts to be tokenised and traded on a public blockchain using smart contracts.
“We wanted to attract new types of investors who may be interested in reinsuring us beyond the typical ILS investors,” says Henning Ludolphs, Hannover Re’s managing director for retrocession and capital markets.
The pilot “was a huge learning curve. The proof of concept was very important in enabling us to do the next step and we expect others in our industry will look [at tokenised reinsurance] too.”
Schroders Capital’s main goal was to explore the efficiencies and improved customer experience that tokenisation can generate, in line with its digital asset strategy of focusing 70% of innovation effort on improving existing business.
The pilot “showed us the power of smart contracts and how they can automate many of the onerous operational tasks within the ILS business model, such as subscriptions and reducing settlement times, and how we can improve the client experience with increased transparency and liquidity,” says Flavio Matter, head of ILS.
“The ILS market remains complex and the opportunity to simplify is tangible. If we can successfully move away from relying on paper contracts and manual/inefficient processes taking precedence over smart contracts, then every participant will benefit from improved service and a far more innovative engagement model,” he adds. “The challenge is to ensure that the clients remain sufficiently protected and the regulators can move at the same pace.”
Reinsurance regulation
Regulation for tokenised reinsurance is generally nascent or non-existent. Despite increasingly supportive noises and initiatives around tokenisation from the likes of the SEC, the Monetary Authority of Singapore, the Bank of England, and the Financial Conduct Authority, reinsurance specifically seems to be low down — or absent — from the list of assets seen ripe for conversion into tokens.
However, Bermuda and the Cayman Islands are leading the charge, with frameworks to accommodate digital asset-backed reinsurance.
Prominent among the reinsurer challengers is Nasdaq-listed, Cayman Islands-based Oxbridge Re Holdings, the owner of two licensed reinsurers and a Web3-focused subsidiary, SurancePlus, which Oxbridge Re said in June it may spin off.
SurancePlus recently turbocharged its distribution capabilities with a memorandum of understanding with blockchain platform Plume, which manages over $4.5bn of assets and serves 18 million unique addresses.
In June it struck a partnership with the foundation behind data protection-focused blockchain, Midnight, which allows organisations to maintain privacy while remaining compliant with regulations
“The way people are doing things in our industry will go on-chain in the very near future and large institutions will follow, if they haven’t already,” said Jay Madhu, chairman & CEO, Oxbridge Re.
Oxbridge Re chairman, CEO and president Jay Madhu says the company is democratising access to reinsurance as an asset class. He notes that recent advances in technology mean anti-money laundering and know-your-customer (KYC) checks can be done in minutes.
“Why does reinsurance have to be available to only a select few putting millions of dollars to work? By doing it on-chain you can be on-boarded and invested with as little as $5,000, all with strict compliance.”
Oxbridge Re complements rather than challenges the mainstream ILS market by targeting smaller investors, he adds. “The way people are doing things in our industry will go on-chain in the very near future and large institutions will follow, if they haven’t already,” he says.
With a wider pool of reinsurance investors, reinsurance should become cheaper, he predicts. “Investors will still do exceedingly well from an asset class that they didn’t have access to before and the end user will pay slightly less for their insurance because the cost of reinsurance has potentially come down.”
Oxbridge Re, in March for the first time, offered both a balanced yield option and a high-yield option, with the launch of two tokenised securities with targeted annual returns of 20% and 42%, respectively.
Another challenger is Bermuda-based and regulated OnRe, formerly Nayms, whose stated mission is to bridge the “reliability of the $750bn global reinsurance market with the transformative power of blockchain.”
In March it launched a token offering projecting returns of up to 40.35%, using the Ethena stablecoin protocol on the Solana blockchain. It says it’s offering “predictable returns” from the established reinsurance market during bearish environments, with “meaningful upside potential” in bullish periods.
Other protagonists include tech entrepreneur Karn Saroya’s Re, which raised $14m in seed funding in October 2022, and Ensuro.
Extra efficiency
Beyond the creation of tokenised securities, insurers and reinsurers are exploring blockchain for product creation and distribution efficiency.
A well-established use case is parametric cover, where payouts are automated when external conditions, such as temperature, rainfall, or the duration of a flight delay — meet certain third-party-verified triggers. No claims notification is required, and no loss adjuster needs to be enlisted to assess the damage.
Among the pioneers of this form of insurance is Lemonade, whose non-profit arm created a drought product for farmers in Kenya.
At the same time, insurers are offering blockchain-based policies that mitigate the risks associated with decentralised finance activity. One such company is Blockchain Deposit Insurance Corp., though the company garnered unhelpful headlines in March when the Bermuda Monetary Authority pointed out that it wasn’t licensed or regulated on the island. (The company responded by confirming it was in the process of filing registration documents.)
Second time around
The initial wave of euphoria around (re)insurance and blockchain fizzled out for various reasons. A lack of regulation was one, the pressures of a prolonged soft market, where premium rates failed to reflect the risk that carriers were assuming, was another, as was the wide, competing array of technologies available to address the industry’s cost base. A misunderstanding about appropriate use cases was a further reason that scattergun industry pilots came to nought.
“There’s a multitude of reasons why blockchain has yet to gain traction in reinsurance, but the main one is it isn’t really fit for purpose,” said Andrew Johnston, global head of insurtech, Gallagher Re.
However, others see the industry as inevitably joining the drive to tokenise.
Charles Kerrigan, finance partner at CMS, part of the law firm’s specialist crypto and digital assets team, says: “Institutional demand is certainly there for tokenised assets and the success of Circle Internet’s IPO is a strong signal that there will be TradFi adoption, including among reinsurers,eventually.
“In a traditional industry like reinsurance you have the ‘scramble for second place.’ Even people who want to do it want someone else to go first. But it will happen.”
Hannover Re is following up its pilot with Schroders with a larger transaction as part of its retrocession, reinsurance for reinsurers, programme. This may happen as early as January 1, 2026, with a target size of $5m to $10m, though Ludolphs says the company is relaxed about the timescale.
He says: “Traditional reinsurance and ILS investors will have a very important role [in the development of tokenisation] because you need competence and know-how about how the industry works rather than just knowledge of the technology.”
“Blockchain and tokenisation are very efficient and an interesting approach to conducting certain kinds of standardised transactions and reaching a new type of investor, but I don’t believe they will take over reinsurance or retrocession. If $10m, $50m, or $100m [of retrocession cover] can be bought from new sources via blockchain it would be a good achievement.”
Schroders Capital’s Matter, meanwhile, says his firm will continue to explore how blockchain can drive the efficiency of its existing business.
“As an asset manager, our direct investors are typically institutions, but in the future, we see the opportunity of offering these services to a wider group, as long as the regulatory controls support it.”
Going forward he predicts more partnerships between fintechs and established financial institutions. “We believe there is space for both, and most likely partnerships will flourish between them. Investors tend to want the security of the proven players like Schroders, but the smaller fintechs can move quicker with their ideas, so our strategy aligns with choosing partners carefully and strategically.”
Timeline of innovation
April 2024 – Aon pilots on-chain placement: Completed a pilot to place insurance using blockchain with Nayms and Copper. Premiums were paid in stablecoins. Brokerage commissions were allocated automatically via smart contracts. The trial showcased tokenised risk capital and on-chain settlement for reinsurance stakeholders.
2024 – OnRe licenses and launches progression: Nayms rebranded to OnRe and advanced as a fully licensed on-chain reinsurer in Bermuda under DABA and IIGB regimes. The model accepts digital assets as collateral and connects on-chain capital to reinsurance risk through a structured product. OnRe positioned itself for scaled placements with mainstream carriers.
2024 – Hannover Re expands ILS facilitation: Increased fronting for collateralised reinsurance and reached a new high in catastrophe bond intermediation. Transferred about $4bn of exposure to capital markets across 13 cat bond deals. Activity supported US property catastrophe retrocession and investor access.
Q1 2025 – Oxbridge Re tokenised programme growth: Reported momentum in tokenised reinsurance via SurancePlus. Announced new 2025–2026 offerings with distinct yield targets. Entered an MOU with Plume to widen distribution. Leadership promoted the thesis at ETHDenver’s RWA Day.
2024–2025 – SurancePlus issuance and infrastructure: Continued to issue tokenised reinsurance securities backed by fully collateralised contracts. Leveraged established digital asset rails for onboarding and transfer. Positioned products for accredited investors under US exemptions.
July 2025 – Members Capital Management tokenised fund: Launched MCM Fund I as a tokenised institutional-grade reinsurance fund. Executed initial portfolio trades with global reinsurers and leading Lloyd’s syndicates. Provided access via Solana, Aptos, Cardano, and Base with institutional partners including Archax and Coinbase.
July 2025 – ChainThat DLT risk and capital exchange: UK vendor moved to a production trial for a distributed ledger exchange in Bermuda. Aimed to streamline risk placement and capital flows for reinsurers and ILS investors.
