Insuranceciooutlook

3 Ways Blockchain Helps Insurers

By Insurance CIO Outlook | Friday, November 08, 2019

Blockchain is the key to streamline the complex insurance processes and reduce operational costs for firms.

FREMONT, CA: The emergence of blockchain is considered revolutionary across the industries. Experts are eyeing blockchain to transform conventional practices in the insurance industry. The inherent risks involved in the insurance industry have turned it averse to technological adoptions. For instance, despite the availability of online brokers, customers still prefer to call insurance brokers to buy new policies. However, blockchain can offer a greater level of transparency to the insurance industry as compared to the traditional systems and practices. Further, the nuance of involving various mediators in the insurance sector can also be minimized via blockchain. 

Insurance processes are often complex, involving various players such as consumers, brokers, insurers, and reinsurers. The redundant procedures, such as multiple rounds of policy assessments, turn the insurance processes extremely slow. Blockchain can address the above issue by automating the key processes. Here are some potential applications of blockchain that can disrupt the entire insurance sector:

Risk and Fraud Prevention 

According to a report, the insurance sector suffers a loss of over $80 billion due to fraudulent activities. Blockchain can prevent unethical practices as it stores transactions in a decentralized manner. Blockchain can also facilitate the evaluation of the authenticity of policies, claims, and transactions.

Claims Processing

Generally, customers tend to miss out on certain aspects of insurance contracts. Insurance contracts are often too long and confusing. Blockchain and smart contracts offer an alternative to the above issue. Blockchain involves recording and confirmation of contracts on the digital ledger. The blockchain setup ensures that only valid claims are forwarded at the time of submission of a claim. The use of blockchain considerably reduces time and effort as it allows several claims to be processed simultaneously.

Product Development

Blockchain allows insurance firms to remain updated with the latest data and information. Further, blockchain technology also enables firms to integrate data from various sources, which has been a challenge for insurance companies. Based on the refined data and information, insurance firms can come up with innovative policies.

Overall, blockchain can impart immense value to the insurance sector. Blockchain will be the key incorporation for the insurance firms eyeing to streamline their processes and minimize their operational costs.

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