Blockchain for Insurance: Enhancing the Future!

By Insurance CIO Outlook | Monday, August 19, 2019

BlockchainBlockchain-based solutions are already modifying the industry helping insurer's onboard clients more assuredly, easing reinsurance methods, and designing smart insurance contracts, among other features.  

FREMONT, CA: In the pursuit of excellence, the digital world is transforming at an accelerated pace. Technology now affects the daily lives and other features with the ability to enhance it significantly. The insurance business is known for its importance in embracing technology and growing with it. Blockchain is the game-changer and is much more than the database ledger technology that powers bitcoin. It is an innovative technology that will unlock new business opportunities, mitigate transaction costs, and enhance trust, protection, and effectiveness of existing processes. It has the power to disrupt and transform industries that have been conventionally resistant to change. Insurance is an extraordinary example of a sector that could be significantly modified by blockchain. Visionary business leaders are forging new use cases for blockchain and entrepreneurs. They are building insurtech businesses that are pioneering new products and addressing unique markets.

Globally, insurance businesses lose over 80 billion USD to fraud every year. The biggest challenges faced by insurers in combating fraud is that adjusters mostly rely on physical processes. It verifies claim information such as item ownership, authenticity, history, etc. fraudsters can manipulate that. The encrypted nature of blockchain transactions when integrated with its unique, robust provenance ability allows creating an autocratic digital file of claims and real-world items. These individual digital records can be used to track and authenticate physical items of value during their entire life while making it exceptionally difficult for criminals to deceive the system. The insurance business benefits from blockchain's functionality by using it to automate and simplify the user onboarding process. Blockchain allows the verification of multiple identity documents provided by a new consumer.

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The evolution of the sharing economy, epitomized by companies has created the possibility for new, progressive insurance products. It addresses the difficulties inherent in leveraging personal assets for commercial objectives. Insurance organizations are using blockchain technology to expedite short term commercial insurance contracts for the sharing economy. Blockchain facilitates companies to provide on-demand, time-stamped, and secure documents of insurance without the requirement for a costly centralized processor. The cost disruption offered by blockchain technology is enabling the companies to open up a whole new market. Processing and holding data on a dispersed ledger will allow reinsurers to receive verified real-time data straight from the primitive source, without having to involve their counterparties insurers in the case. This also guarantees faster capital allocation for satisfying future demands. The benefits are even more evident when we take into account that insuring businesses involves a multitude of reinsurers for the same contract.

One of the most powerful capabilities of blockchain is smart-contracts, which are programmable and self-executable for pre-determined requirements without the necessity for external intervention. This technology has enormous potential to automate, thus reducing costs, of all manner of contracts including insurance claims. Insurance businesses design smart contracts that automatically expedite applications for loss reimbursement in case of adverse weather conditions-damage properties. Such arrangements are built around all kinds of measurements such as weather readings and sensor data, making such claims more credible and less subjective or potentially fraudulent.

Blockchain is advancing very quickly as notable capital, and innumerable innovative minds are being invested in it. It gives all stakeholders with the tools to increase operational efficiency. It acts as a digital hub for every corporate data streams and transactions. Blockchain makes claims management more permissive and more automated, assuring the integrity of data and automating the means of claim submissions. As blockchain gains traction in the business with increasing adoption rates, it is essential for industry players to accurately follow the breakthroughs that the technology brings to the table so as not to linger behind the digital transformation.

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