Japanese insurance company Tokio Marine & Nichido Fire Insurance and system integration specialist NTT Data Corporation announced that they had completed a proof of concept for blockchain-based cargo insurance certificates for the international trade finance market.
The test involved creating a data bill of lading, letter of credit, and a commercial invoice on a distributed ledger and was then tested from the perspective of the shipper who needs an insurance certificate to satisfy the insurance requirement on the letter of credit needed for a trade finance transaction.
A bill of lading is a legally binding document between the shipper of goods and the carrier in an international trade transaction that details all specifications such as type, quantity, and destination of the goods being shipped. The bill of lading also functions as a receipt of shipment once the goods arrive at the predetermined destination. A letter of credit is issued by a bank to act as a guarantee of payment to a specific entity under predetermined conditions, and a commercial invoice is a customs document that provides a customs declaration by the exporting party when crossing international borders. The new blockchain-based system can take the required data from the bill of lading, the letter of credit and the commercial invoice to create the required digital certificate of insurance.
According to Tokio Marine, the new system can substantially reduce the time it takes shippers to input data compared to the current online insurance certificate issuing service being used. “It was actually proven that the blockchain-based system will cut 85 percent of the shipper’s time of data inputting work in order to receive an insurance certificate. It was also tested in terms of accessibility from the parties concerned, such as consignee and banks,” Tokio Marine said in their statement.
The proof of