The B3i Failure - Lessons for XRP

B3i started as an informal collaboration between five major European insurers exploring blockchain applications:

Original Thesis:

1. Reinsurance settlement is slow (30-90 days)
2. Contract certainty is delayed
3. Multiple parties reconcile same data separately
4. Significant administrative overhead

• Shared ledger for reinsurance contracts
• Automated settlement via smart contracts
• Single source of truth eliminates reconciliation
• Faster, cheaper, more accurate processing

Technology Choice: Corda

B3i selected R3's Corda platform—a permissioned, private blockchain designed for financial services. This was a deliberate choice to avoid the regulatory and volatility concerns of public blockchains.

• Permissioned (known participants only)

• Private (data shared only with counterparties)

• No native cryptocurrency

• Smart contracts in familiar languages

• Enterprise-grade security

• Regulatory acceptance easier

• No cryptocurrency volatility

• Compatible with existing legal frameworks

• Privacy preserved between parties

B3i formalized as a company in March 2018:

Corporate Structure:

B3i Services AG (Zurich, Switzerland)
- Legal form: AG (stock corporation)
- Shareholders: 20+ major insurers/reinsurers
- Employees: ~50 at peak
- Funding: Multiple rounds, total undisclosed but substantial

Expansion of Shareholders:

2016 Founders:     Aegon, Allianz, Munich Re, Swiss Re, Zurich
2017 Additions:    Generali, Hannover Re, Liberty Mutual
2018 Additions:    MAPFRE, RGA, SCOR, Tokio Marine, XL Catlin
2019-2020:         Achmea, Ageas, Deutsche Rück, and others

Total by 2020: 20+ major shareholders
Representing: Majority of global reinsurance capacity

B3i focused initially on reinsurance, developing a product called Property Cat XoL (Property Catastrophe Excess of Loss):

Property Cat XoL:

• Digitized cat XoL treaty documentation

• Enabled electronic placement and binding

• Automated premium calculations

• Provided shared view of contract terms

• Reinsurers (as buyers of retrocession)

• Primary insurers (as buyers of reinsurance)

• Brokers (as intermediaries)

• Smart contracts on Corda

• Standardized data models

• Integration with existing systems

Other Products in Development:

- Excess of Loss reinsurance (beyond Cat XoL)
- Facultative reinsurance placement
- Claims processing workflows
- Proof of insurance certificates

By late 2021, B3i was struggling:

Timeline to Insolvency:

Late 2021:  Funding round fails to meet targets
            Key personnel departures begin

Q1 2022:    Another funding round attempted
            Shareholders decline to increase investment
            Cost-cutting measures implemented

Q2 2022:    Business development stalls
            Product adoption below projections
            Operating losses unsustainable

July 2022:  Board concludes company not viable
            Insolvency filed in Zurich
            Operations wound down

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Swiss Re's Chief Financial Officer provided post-mortem insights that illuminate B3i's failure:

The Core Problem:

Despite backing from major reinsurers, B3i couldn't achieve sufficient transaction volume:

• Shareholders committed to "support" B3i
• But: Support ≠ moving production business
• Product was live, but usage was limited
• Network effects never materialized

1. Existing systems "good enough" for most users
2. Integration costs exceeded perceived benefits
3. No compelling trigger forcing adoption
4. Chicken-and-egg: Value requires network,

Swiss Re's CEO observed: "We would need an end-to-end view... You just don't get to the efficiency you need if you just start with that [reinsurer interface]."

The End-to-End Problem:

B3i Scope:
──────────────────────────────────────────────────────────────
B3i covered: Reinsurer ↔ Reinsurer interface
             (Contract placement and settlement)

- Primary insurer policy administration
- Original policyholder interaction
- Claims adjustment process
- Investment management
- Regulatory reporting

Result:
Even if reinsurance placement was on blockchain,
all adjacent processes remained unchanged.
Partial digitization delivered partial value.

The Governance Problem:

• Munich Re wants different features than Tokio Marine

• Some shareholders compete directly with each other

• Decision-making slow due to consensus requirements

• Product roadmap pulled in multiple directions

• Investment decisions required board approval

• Single vision, fast execution

• Pivot quickly when needed

• Founder-led decision making

• Users come first, investors follow

B3i had investors but struggled to attract users
```

Integration Reality:

1. Install Corda node infrastructure
2. Integrate with existing systems (SAP, etc.)
3. Train staff on new workflows
4. Maintain parallel processes during transition
5. Convince counterparties to also adopt

Cost of adoption: Significant
Benefit of adoption: Incremental efficiency
Payback period: Uncertain, multi-year

Result: Rational decision to delay/avoid adoption
```

The 2016-2022 Blockchain Reality:

• Immense hype

• Limited production experience

• Performance concerns

• Integration tools immature

• More mature, but hype deflated

• Traditional tech catching up

• SWIFT gpi addressing speed concerns

• Cloud/API solutions improving interoperability

B3i's timing problem:
Started when blockchain was overhyped
Failed when alternatives had improved

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B3i wasn't killed by regulators or technology limitations. It was killed by insufficient adoption from its own shareholder base.

What This Reveals:

• Invested in building a blockchain solution

• Had every incentive to make it succeed

• Faced clear inefficiencies in their operations

• Still didn't adopt at sufficient scale

• Current pain is tolerable

• Switching costs exceed benefits

• Blockchain is not a priority

• "Good enough" beats "theoretically better"

B3i used Corda specifically to avoid cryptocurrency volatility and regulatory concerns. This choice is relevant for XRP comparison:

B3i (Private Blockchain):

• No cryptocurrency volatility

• Regulatory acceptance easier

• Privacy between parties

• Compatible with existing legal frameworks

• No native settlement asset

• Still required traditional payment rails

• Network effects limited to participants

• Integration complexity remained

XRP (Public Blockchain with Native Asset):

• Native settlement asset (XRP)

• Global network without consortium

• No chicken-and-egg onboarding problem

• Settlement IS the value proposition

• Cryptocurrency volatility

• Regulatory challenges

• Less privacy (public ledger)

• Less enterprise acceptance (currently)

B3i focused on smart contracts for contract administration. XRP focuses on settlement. This is a critical distinction:

Key Difference:
B3i tried to change how insurance works
XRP would only change how payments work
```

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Lesson 1: Don't Require Industry Transformation

B3i's Mistake:
Required insurers to change contract administration,
adopt new workflows, integrate deeply with systems.

XRP's Advantage:
Could potentially work alongside existing processes.
Only payment execution changes, not contract logic.

Application:
XRP should position as payment rail upgrade,
NOT as insurance industry transformation.

Lesson 2: Solve a Real, Felt Pain

B3i's Mistake:
Addressed friction that was tolerable.
30-60 day settlement was inconvenient, not crippling.

XRP's Question:
Is payment execution friction actually painful?
Or is it just slightly suboptimal?

- Catastrophe claims (urgent liquidity)
- Time-sensitive settlements
- High-cost corridors

Lesson 3: Avoid Consortium Dynamics

B3i's Mistake:
Tried to get competitors to cooperate.
Decision-making paralyzed by consensus.

XRP's Structure:
Ripple is a company, not a consortium.
Can make decisions quickly.
Doesn't need industry-wide buy-in to start.

Application:
Work with individual insurers, not industry groups.
Prove value with one partner before scaling.

Lesson 4: Start with Pain, Not Theory

B3i's Mistake:
Built technology, then sought adoption.
"If we build it, they will come" didn't work.

XRP's Question:
Who is actively seeking faster settlement?
Where is current friction causing business loss?

Application:
Find insurers losing business due to settlement delays.
Solve their specific problem first.

Key Distinctions:

Dimension            B3i                  XRP/Ripple
──────────────────────────────────────────────────────────────
Ownership            Consortium           Company
Decision-making      Consensus            Centralized
Technology           Private (Corda)      Public (XRPL)
Native asset         None                 XRP
Primary value        Smart contracts      Settlement speed
Integration depth    High                 Lower
Adoption path        Industry-wide        Individual partners
Revenue model        Subscription/fees    Transaction volume

XRP's Structural Advantages:

1. Native Settlement Asset:

2. Global Network:

3. Lower Integration Bar:

4. Company vs. Consortium:

B3i's failure doesn't guarantee XRP's success. Similar challenges apply:

1. Regulatory barriers (Lesson 5)

2. "Good enough" alternatives

3. Volatility concerns

4. Trust and familiarity

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✅ B3i failed despite strong industry backing
✅ Consortium governance created decision paralysis
✅ End-to-end transformation was too ambitious
✅ "Good enough" alternatives limited adoption urgency
✅ Private blockchain without native asset still needed traditional payments

⚠️ Whether XRP's different approach avoids B3i's problems
⚠️ Whether payment-only focus is sufficient value proposition
⚠️ Whether individual adoption can succeed where consortium failed
⚠️ Whether regulatory barriers are more or less surmountable

🔴 Dismissing B3i failure as irrelevant to XRP
🔴 Assuming "if we build it, they will come"
🔴 Ignoring that insurance industry chose not to adopt blockchain
🔴 Underestimating how resistant insurance is to change

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Assignment: Apply B3i failure analysis to a specific XRP insurance use case.

Requirements:

• Select specific insurance payment scenario

• Define current process and pain points

• Identify decision-makers and stakeholders

• Which B3i failure factors apply?

• Which don't apply?

• How would XRP approach differ?

• What could cause XRP to fail similarly?

• How can those risks be mitigated?

• What would success look like?

• What milestones would indicate progress?

• What would trigger scale-up vs. abandon?

Time investment: 3-4 hours

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1. Why did B3i choose Corda over public blockchains?
B) Regulatory acceptance and no cryptocurrency volatility

2. What was the primary cause of B3i's failure?
C) Insufficient adoption by its own shareholders

3. What is the key difference between B3i and XRP value propositions?
A) B3i focused on smart contracts; XRP focuses on settlement

4. What Swiss Re insight is most relevant for XRP strategy?
B) Need end-to-end solution for full efficiency

5. What B3i lesson most supports XRP's approach?
D) Individual company adoption vs. consortium dynamics

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End of Lesson 6

Total words: ~4,200