FREMONT, CA: Many facets of the insurance industry stand a chance of change with blockchain technology. Here’s determining the feasibility of the industry’s aspirations.
The features of blockchain technology seem to be tailor-made for the insurance sector. The vastly complex processes in insurance companies can find many advantages from the use of blockchain. The extent of benefits is so much that many experts tag blockchain as the disruptive technology in the insurance industry. According to a 2018 report by research organization MarketsandMarkets, the value of blockchain components in the insurance sector will see a compound annual rise of 84 percent. Major areas in which blockchain is expected to impact the insurance firms are discussed here.
• Automation of processes
Automating verification of claims by combining ledger technology and smart contracts can be beneficial for insurance companies. The process of verifying claims are cumbersome and take a lot of time. Errors and abuse cannot be ruled out from the manual processes either. Blockchain can make these processes efficient and reduce operational costs.
• Prevention of Fraud
Frauds are a recurrent issue in the insurance industry, and blockchain can successfully mitigate frauds to a vast extent. With the help of distributed ledgers, companies can ensure that there are fewer cases where parties file claims for the same event with many insurance firms. Blockchain entitles companies to a lot of transparency, which enables careful tracking of suspicious customer behavior.
• Healthcare and Life Insurance
Healthcare data can be efficiently managed, accessed, and utilized by the insurance industry, the medical sector, and the patients themselves if blockchain technology is used to create patient health data records. The premiums that individuals have to pay for life insurance are calculated based on health records. With secure databases, the premium calculation will be automated.
• Secure Record Keeping
Many of the claims handling processes make record keeping necessary. These records are of utmost importance, and storing these on immutable ledgers reduces the risks of loss and forgery of documented records.
Going forward, one can expect the further application of blockchain technology to the insurance industry in streamlining reinsurance, and facilitating peer-to-peer insurance. The ambitious utility cases for blockchain in the insurance industry can help it realize faster growth and fewer risks.