Blockchain Digital Bonding Exploration Begins!

In past Pipeline columns, I have focused on the importance of moving toward a digital bonding future and the work underway by The Institutes RiskStream Collaborative, a consortium working on the application of blockchain technology to surety processes to gain greater efficiency and security. RiskStream Collaborative’s first foray, an exploration of blockchain technology to improve the process surrounding powers of attorney, has generated considerable interest and attention. Despite still being in the formative stages of exploration, the work being done on digital powers-of-attorney has created momentum for examining digitizing the delivery of surety bonds themselves.

On December 1, RiskStream Collaborative hosted a first summit on blockchain applications for digital bonds. Approximately 200 individuals, principally surety company underwriters and bond producers, participated in the Zoom meeting, though among the participants were trade association staff, such as those from NASBP, surety industry technology vendors, and a representative from Office of Surety Guarantees of the US Small Business Administration, an excellent first showing. The summit kicks off this exploration in parallel to phase two of the power-of-attorney verification lab, and subsequent virtual meetings will occur so as not to conflict with participation in either initiative.

The goals of the summit were four-fold:

✓ Define a high-level problem statement related to the current process that this Lab will help solve

✓ Verify all key stakeholders in the process

✓ Identify pain points related to the existing bond execution and delivery process

✓ Business process flows and areas where there are opportunities for blockchain

A draft problem statement was presented, reading:

“The current process of executing and delivering a surety bond is expensive, time consuming, inefficient, and still largely a paper process. Although executing surety bonds electronically is not a new practice,

* Beneficiaries (obligees), principals, agents/brokers, and sureties are increasingly using different bonding systems of their choice, but this often requires other stakeholders to subscribe to and work within those systems as well, without having a choice.

* The increasing number of disparate stakeholder systems involved creates an interoperability issue, duplicated work, and an increased risk of error.

* Additionally, the Bond execution processes across the globe have various specificities.

The lack of a highly scalable, universal solution that is securely connected to other stakeholders exacerbates operational efficiency gains, accuracy, security and trust.”

RiskStream Collaborative welcomes broad participation from all stakeholders, including those in international markets, to help refine the problem statement and to identify interests and the ultimate scope of the proof-of-concept effort. View the pdf of the slide presentation and the webinar of the presentation of the kickoff summit.

This kickoff summit was merely the first in a succession of meetings that will be held, as session dates are planned for January, February, and March. NASBP will be represented in these sessions, but broad participation by the bond producer community will be important to ensure that the RiskStream Collaborative fully understands and appreciates producer interests, perspectives, and needs.

NASBP will continue to provide you with information about how to get involved, including the dates of all upcoming meetings.