Insuranceciooutlook

How can DLT in Insurance Offer Transparency, Security, and Accountability?

By Insurance CIO Outlook | Friday, November 08, 2019

The potential of blockchain to build trust and transparency in a trustless environment by using shared ledgers and improved security protocols has significant implications for the future growth of the insurance industry.

FREMONT, CA: Insurance policies are often executed on paper documents, implying that claims and payments are prone to errors and often require human supervision. Every step in this collaborative effort is a possible failure point in the overall system where data can be lost, and policies could be misinterpreted. Enter blockchain- a decentralized, cryptographically secure method of record-keeping that offers trust, accountability, and security to the insured and insurers.

Insurance firms and start-ups operating with blockchain technology will have to tackle major regulatory and legal hurdles. To be the next standard insurance industry benchmark, it is too early to decide if blockchain technology will overcome the legal and regulatory barriers. But, there are infinite possibilities for insurance companies and start-ups to adopt the technology.

Through logging every transaction using a public ledger, blockchain can effectively remove suspicious transactions. With the historical records across its decentralized digital repository, this technology can verify the authenticity of customers, policies, and transactions. Blockchain makes it challenging for hackers to corrupt and steal files.

Blockchain can use personalized digital tools to tackle the increase in transactions and claims made by third parties. By automatically verifying third-party claim/payment data, blockchain significantly reduces administrative costs. Today, insurance companies can quickly access past claim transactions that are registered on blockchain for easy reference. It fosters higher degrees of trust and loyalty between customers and insurers. Blockchain offers accurate calculations within the reinsurance space based on existing contracts.

Blockchain will not only save time and money but will also help insurers increase their customer satisfaction by providing full accountability, transparency, and security. This technology will also develop stronger relationships as the insurance company and the insured build up higher levels of trust.

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