People just love to talk about blockchain technology these days and how it is impacting industries across the globe. Leading insurance companies are investing in blockchain, unlocking new ways to improve the quality of their products. Nobody had heard about the applications of blockchain in the insurance industry a few years ago.
However, the ongoing hype suggests that blockchain has the potential to completely transform the insurance sector, enabling greater competitive advantage, efficiency, and growth. Email automation was once a new thing for insurance companies and agencies and they were reluctant to try it out. Today, smart automation is an integral part of insurance marketing.
It is likely that the insurance industry wouldn’t take too long to fully focus and deploy blockchain technology. Those who are not taking this technology seriously might end up playing catch up with higher costs. Blockchain may not be generating enough benefits for insurers today. But it will play a key role in future growth. Here is how blockchain is disrupting the insurance industry:
Did you know the total cost of insurance fraud in the US alone? According to the FBI, it is $40 billion a year. Surprisingly, there is no standard way to detect those frauds. Since blockchain facilitates improved data sharing by consolidating claims data across channels, insurers can use the technology to reduce fraud. Today, we see insurers gathering data from private companies or public domains to evaluate fraudulent activities.
The practice is helpful to a certain extent, but it lacks consistency because organizations hesitate to share sensitive information with other partners. While insurers are still exploring how emerging technology will stop fraud, it certainly has the potential to disrupt fraud detection.
Leanne Kemp, CEO Everledger, says, “When I saw what the fundamental principles of the blockchain provided, it was just patently obvious to me that it would make sense around reducing fraud-related instances of valuables.”
P&C insurance is a massive industry, but it struggles to gather all the important data to process claims. A common person may think of insurance as a contract that outlines circumstances in which the insurer is liable for damages. This can be solved by hoarding all data in a single place, or by managing data to be easily accessible – yet protected. However, it’s a complicated process to verify that all the conditions for each policy are met. Blockchain technology can simplify things by automating the claim process through smart contracts that live on a blockchain. This could lead insurers to save more than $200 billion a year in costs.
The prime function of insurance is to help people deal with risk and mitigate the impact of unexpected events. However, this could make things look really ugly for insurers during natural disasters like wildfires and hurricanes. This is where reinsurance helps insurers insulate themselves from the risk of a major event.
Blockchain technology can streamline the flow of information between reinsurers and insurers to upend current reinsurance processes. It will help update comprehensive information around premiums and losses on a reinsurer and insurer’s computer at the same time. Related topics would be all about how Blockchain accelerates insurance transformation.
When someone files a life insurance claim, emerging technology can help simplify and automate the process. Right now, we see so many hurdles in a claim registration process involving hospitals, beneficiaries, funeral homes, insurers, etc. Blockchain can host all the stakeholders on one network, making the entire process transparent and readily accessible.
Blockchain technology can be leveraged to create, organize, and maintain company records in a single, dependable, and accessible repository. This will make life easier for everyone: employees, customers, insurers, etc. That is one of the main advantages of blockchain technology – keeping a track of the change in real-time. Once all interested parties are on the same page, it is easier to manage the insurance process.
The true potential of emerging technology is still to be explored. But we can already visualize some of the promising applications of blockchain across the insurance industry. Blockchain-powered smart contracts could provide insurers and customers with the means to manage claims in an irrefutable and transparent fashion. Insurance contracts are complex, no doubt about that because not everyone can understand the legal language used in those contracts. When something wrong happens, people have to go through a lengthy claim process. Emerging technology brings clarity and transparency between customers and insurers.