Transparency, immutability, and security, some of these worlds have become synonymous with blockchain. The revolutionary tech is finding its applications in almost every business niche. Today, we’ll be exploring blockchain applications in Insurance. Surprisingly, the amalgamation of blockchain and insurance is not only a discussion topic but also a high point of conversation among the technology providers, insurance providers, and investors.
Why is Blockchain the Answer?
Transactions in a blockchain database get time-stamped. It makes easy for everyone in the network to trace the origin and destination. Also, blockchain forms as the underlying technology for various applications aimed at benefitting public. Its features are endless which make it a trending technology. It is the reason, the applications of blockchain are expanding exponentially in various industries. In result, the demand has gradually surpassed the supply of blockchain developers.
When it comes to the insurance sector, the database is the key. However, technology enthusiasts add up to the confusion by saying that blockchain is a substitute for the database. Instead, we should call it the internet based smart database which is more efficient and secure than what we have today.
The fundamental features of blockchain provide a series of benefits to the insurance firms, the likes of which are the following:
Customer identity and AML
Underwriting
Distribution
Innovative products
Claims handling
Reinsurance
Capital markets
Benefits of Blockchain Applications In Insurance
Blockchain can streamline, modernize, and enhance the siloed infrastructure of the Insurance sector using a shared ledger of common information.
Simplified Operations
Reduces human intervention required to perform reconciliation and fix disputes.
Enhanced Regulatory Efficiency
Allows real-time tracking of the financial activity of regulated entities by regulators.
Reduced Counterparty Risk
Eliminates the need to rely on counterparties to achieve obligations through smart Contract.
Reduced Clearing and Settlement time
No need for third parties for verification/validation. Thus, expediting settlements.
Minimized Frauds
Enables complete transaction history and asset provenance maintenance within a single source of truth.
How Blockchain Addresses the Pain Points in the Insurance Sector
Identity Theft
Industry leaders accuse that false claims, fraud detection, and time-consumption in application verification are the issues that hinder flawless operations. Here, blockchain based insurance applications might come as a solution. Blockchain could be utilized as a distributed database having both internal and external customer data. Once the system implementation is successful and filled with information, the platform would automatically verify the documents like medical reports, address proofs, etc. Not only would it expedite the entire processes but also aid in reducing human intervention. Eventually, lowering the possibilities of errors.
Decentral Data Repository
Be it any business niche or industry, one of the primary concerns is the security of data. Various current data security systems, whether in banking, insurance, or healthcare, are vulnerable to threats and hacks. You might have also heard numerous cases of data hacks and breaches.
Here, blockchain can emerge as the solution. Unlike traditional systems, in blockchain, data doesn’t get stored in at a central repository. It gets saved on the distributed nodes that form a blockchain network. It means anyone on the chain can view the transactions. Also, making any alterations to data require changing all previous blocks of information or the majority of the network consensus. Thus, making the system safe and secure. Furthermore, blockchain uses the means of military-grade security mechanisms for information encryption. Thus, maintaining the anonymity factor.
Cost-Effective Opportunities
According to the report published by PwC, blockchain, with its unique attributes, can make data processing more efficient and reduce frauds. Overall, it could remove 15-20% of overheads incurred during the insurance process and save around $5-10 billion.
Blockchain Applications in Insurance Verticals
Initially, we focussed on the overall blockchain’s benefits in the insurance sector. Now, let’s understand how blockchain simplifies other sectors within the insurance industry.
As we know it is quite messy and a cumbersome process to the get the insurance claim. To streamline this, we require improved and interconnected processes. Here, blockchain based insurance applications can help catalyze the complete process of the insurance domain. Here’s how it is possible.
Blockchain in Healthcare Insurance
Blockchain aims to address the shortcomings of contemporary data management systems of the healthcare sector. By interconnecting all the medical facilities, insurers, physicians, patients, etc. blockchain based healthcare solutions improve the level of care of patients. Additionally, they also streamline the complex processes by saving all the data in a central repository.
Blockchain in Automotive
Blockchain can be beneficial for the automotive industry in two ways. First, it can form an interconnected ecosystem of all the users and service providers. With the help of shared ledger, all the information can be readily made available. Thus, helping auto insurers in lowering risks and frauds. Second, using blockchain smart contracts, insurers can fasten the claim processing.
Blockchain in Life Insurance Sector
Although life insurance seems easy and simplified, the process of getting a claim is a daunting task.
During the process, applicants face numerous questions, innumerable paperwork, and money drainage. However, with blockchain based insurance applications, agencies can make things straightforward. By forming a consortium of government agencies, medical facilities, etc. blockchain can all information available at the disposal. In addition, insurance firms can choose to develop smart contracts to automate payouts to respective beneficiaries.
Developing Blockchain Applications in Insurance
Oodles has set out to explore the potential of distributed ledger technology (DLT) like Blockchain. We wish to see the use of blockchain applications in Insurance on a global scale. It could form an improved value chain of all stakeholders. We develop efficient blockchain based insurance applications by developing them on a platform that can bring better outcomes and opportunities.
Eventually, we can help the community of shareholders, partners, and customers to form a netwource: ork of insurance services and products designed “by the market, for the market.”
Source https://blockchain.oodles.io/blog/blockchain-applications-in-insurance/