How Blockchain Adds Value to Life Insurance Landscape

By Insurance CIO Outlook | Friday, September 04, 2020

Blockchain expedites the life insurance claims processing and instills transparency into the processes.

FREMONT, CA: Blockchain has emerged as a highly disruptive technology in the past few years. The technology has been predominantly influencing in the insurance industry. Life insurance can benefit immensely from the blockchain. This technology can transform the traditional processes involved in life insurance and provide a higher degree of transparency.  

The life insurance industry is under dramatic transformation, which is driven by technology. The traditional operations involved in life insurance were both slow and ambiguous. For instance, when the insured is given a quote for a policy purchase, certain documents require insurability validation. The document proof of KYC is provided either electronically or in the paper format, along with the application. A delay in the submission of documents results in a delay in policy activation. Further, any manual documentation impedes processing for contestable claims.  

The above issue concerning policy delays can be addressed through blockchain. The applicant’s documents can be obtained by the insurer from the government organization via blockchain during the underwriting process. The authorization to provide the documents will be sought from the applicant. This process will also result in efficient underwriting of insurance policies. Further, the applicant will not be required to submit various identification papers as part of the insurance application process.  

Health records also play a key role in determining the premiums that holders of life insurance policies should pay. Once the patients’ medical histories have been moved onto a secure medical database operating on a blockchain, it will be possible for life insurers to estimate premiums and issue policies based on it. Moreover, the smart contract is triggered automatically in case of a policyholder’s death resulting in a smooth transfer of insurance money into the beneficiary’s account.    

Blockchain promises a number of advantages to the life insurance sector. With an increase in the advancement and popularity of blockchain, insurers, as well as insured, will benefit immensely from the technology.

See Also: Top Insurance Technology Solution Companies

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