Can Blockchain Assure the Future of Insurance Industry?

Created on October 10, 2018 6:33 pm

Technological disruption is gaining its momentum across industries and the disruptive innovations including blockchain are creating new market spaces. The adoption of blockchain in insurance technology is not just the insurers focus alone but also the bullseye for analyst groups, technology providers and investors. Insurers and technology providers are working on the strategy in adopting the blockchain technologies which would act as their best risk management strategy in terms of technology disruption.

According to PWC, Reinsurers are in line to build some of the biggest blockchain applications outside the payments sector, opening up a $5-10 billion cost saving opportunity.

Now let’s see how the blockchain technology actually works in the existing insurance business. We understand that the Insurance businesses process includes phases (a) proposal forms, quotations, underwriting; (b) Re-insurance & Co-insurance; (c) Accounts & Billing; (d) Customer Support & Inquiries Management; (e) Claims Settlement. Leveraging blockchain technology the insurers could record all transaction on a provable, permanent ledger which is more transparent and secured. This enables insurers dealing with data confidentially while dealing with multiple stakeholders.

If we are wondering on how effective the blockchain technology could disrupt the industry, below are a couple of quick takes across key business processes

• Smarter Underwriting Process: Automate the underwriting business with smart contracts resulting in quick turnaround time with reduced cost.
• Accelerating Claims Settlement: The distributed ledger enables multiple stakeholders to update information resulting in faster data verification and reduce Loss Adjusted Expenses (LAE).
• Fighting Insurance Fraud: With improved traceability of transactions and integration of 3rd party investigation services the ability to fraud detection is enabled.

Technology Research groups believe that blockchain will be playing critical roles in future across various insurance verticals

Life Insurance

Getting a claim settled from the Life Insurance company is one of the most intimidating jobs. It involves a series of investigations and immense paperwork signed off by various government and private units that end up the users with more frustration. Blockchain groups all medical units, government agencies under one umbrella and by availing smart contracts it issues automatic settlement with medical care units and beneficiaries.

Auto Insurance

Interlinking all service providers and automobile users with the help of shared ledger would trigger anytime anywhere information readiness. And via smart contracts, the claims settlement would be faster and reducing fraud.

Health Insurance

System interconnection across medical care units, insurers, re-insurers, patients, medical practitioners, etc. with the help of blockchain would streamline the data into a centralized repository and increase the effectiveness of patient care system.

Conclusion

At present, the penetration of blockchain technology in the insurance industry is quite slow. But as the potential of the blockchain is going to be realized, Insurance and reinsurance companies will increasingly focus on implementing the blockchain technologies. And it’s going to be the distributed ledger technology which will move the insurance industry to the next competitive level.