Blockchain Tackling Insurance Industry Challenges

By Insurance CIO Outlook | Monday, July 29, 2019

Insurance IndustryBlockchain is a high-tech catalyst for insurers to modernize businesses globally.

FREMONT, CA: Blockchain has been revolutionizing the businesses across all sectors, and its popularity is evident. The most significant global insurance and reinsurance players have joined alliances leading in the blockchain. They offer products built on distributed ledger technology. Although generating value from blockchain is a huge roadblock, and several models are there to leverage distributed ledger technology.

•  Intra-Carrier

The intra-carrier model is a tightly controlled blockchain deployment within an organization. It is typically used to streamline back-office processing. Retaining the blockchain within a particular enterprise gives the most control. The facilitation of transactions between trustless or semi-trusted counterparties without an intermediary is missed out. Geographically-distributed organizations are finding a use for an internal blockchain in rare complicated circumstances. Insurers should use alternative technologies that yield similar benefits. Before embarking on the blockchain journey, insurers should evaluate whether or not there are underlying issues to address.

Check out: Top Insurance companies

•  Inter-Carrier

Carrier-to-carrier transactions will benefit from the speed and consensus mechanism that is provided by distributed ledgers. Reinsurance Industry is one sector ready for disruption as it is a complex but standard process for which process enhancements yield direct benefit. It is still not the only option and agencies are focused on making catastrophe swaps more convenient. Insurance companies will reap benefits in the inter-carrier payments as investment banks are experimenting with more efficient payments in trade settlements.

•  Enabling industry collaboration

The majority of blockchain-related activities in insurance focus on internal POC projects. Industry players are also coming together to investigate the viability of broader blockchain platforms. An exceptional collaborative blockchain use case is that of fraud apprehension and prevention. Legal and ambitious challenges have hindered insurers' attempts to yield intelligence on fraudulent activity. Developments in the blockchain network provide a way for competitors to safely and securely share data and limit future losses.

For insurers seeking to tackle difficulties such as poor consumer experience, expensive manual administrative methods, and privacy and data security jeopardies, blockchain technology will be part of the solution. Use of blockchain offers notable advantages over other technologies. As blockchain systems are immutable and do not require oversight by a central authority, use of a distributed ledger also opens up new options for secure collaboration as well.

See Also : Top Blockchain Companies for Insurance

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