Insuranceciooutlook

3 Benefits of Blockchain for Reinsurers

By Insurance CIO Outlook | Friday, July 10, 2020

Smart contracts and automated reconciliations are transforming the conventions of reinsurance.

FREMONT, CA: While the insurance industry is stepping up its technological prowess, the reinsurance segment is also latching up opportunities to enhance digital capabilities. Blockchain offers some of the best opportunities when it comes to increasing the efficacy and security in the context of reinsurance. Insurance carriers are today faced with escalating risks, increasing the demand for reinsurance. By bolstering services with blockchain technology, reinsurance providers can easily cater to insurers and optimize profitability. The significant benefits of implementing blockchain in reinsurance are enlisted below.   

Streamlining Information Flow

Top Tech Solutions For Life InsuranceReinsurance necessitates a large amount of data transfer between insurers and reinsurers. Conventionally, the data transfer takes place in a siloed and inefficient manner that often results in delays and hassles. Incorporating blockchain technology entitles both the parties to leverage shared ledgers and achieve a streamlined flow of information. Thus, blockchain technology can drive-up convenience and reduce the costs and risks associated with data transmission.

Eliminating the Need for Manual Reconciliation

With critical information available on shared ledgers and accessible to both insurers and reinsurers, there is an opportunity to automate reconciliation processes and eliminate the need for manual intervention. Traditionally, the reconciliation process used to be a vital aspect in reinsurance as transaction records detailing premiums and losses had to be matched manually. With blockchain systems, both ends have access to a common source of data that promotes decentralized and transparent access.

Faster Claims Processing and Settling

The implementation of blockchain-based reinsurance models creates opportunities for rapid processing and settling of claims. With data available on shared ledgers, reinsurers can facilitate claims redressal in real-time, allowing for expedited settling. Previously, every time there was a claim from an insurer, the reinsurers had to work from scratch, putting together necessary data. Now, accessibility to secure data has changed the story and helped reinsurance processes achieve pace.

By building a secure bridge between insurers and reinsurers, blockchain technology has facilitated a much-needed transformation. From a slow, inefficient model, reinsurance has now graduated to become modern and highly profitable. 

See also: Top Blockchain Technology Companies

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