Blockchain in insurance is set to provide complete accountability, security and transparency to help insurers save money and time.
Many industries are welcoming blockchain with open arms and insurance is joining in. The insurance industry understands that it must evolve with new technologies to stay competitive.
By adopting blockchain technology into its processes, the insurance industry will be able to stay transparent and build trust with its customers. Before we go into how exactly blockchain can empower the industry to do this, it’s important to understand current issues within the insurance industry.
Issues within insurance
Every single insurance company faces a plethora of challenges relating to compliance issues, fraudulent activity and much more. Most insurance companies have to use third parties for payment transactions and legal guidance, which can cause delays and open up areas for hackers to come in, especially if not all third parties have the most up to date security software.
In addition to this, insurers are seeing the challenges when moving to digital transactions. It can be difficult to streamline processes and ensure all sensitive information is secure. The cost alone of putting these changes in place is becoming an issue for many. Along with handling hackers, insurance companies know that they need help. This is where blockchain comes in.
Blockchain in insurance
Whilst blockchain may not be able to help solve all obstacles that the insurance industry faces, it can certainly help with the majority. It provides groundbreaking technology that is able to promote trust, transparency and stability. Here are some of the areas blockchain can have a massive impact on.
Blockchain is a decentralised network of nodes, because of this it has the potential to eliminate all suspicious transactions. By using a public ledger, it can log every single transaction and where it has come from, ensuring no fraudulent activity has gone through the system. Blockchain can also verify every piece of data that is inputted and so can validate the authenticity of policies, customers and transactions. Blockchain can help insurers to guarantee that no information is lost.
The technology of blockchain also renders all third parties unnecessary. It can handle the increase in transactions and claims made through personal devices because of its fast and modern technology. If insurance companies use blockchain and automate all claims and payments through the ledger, they will be able to hey will be able to reduce the administrative fees.
Customers can also quickly view past claims that are registered on the blockchain for easy reference. This, in turn, increases the trust and loyalty between the customer and the company.
Customers choose different insurance companies for a number of reasons including, cost, financial protection and customer service. Blockchain can help with all these factors. We already know it can reduce costs for the insurance company and because of this, the customer can benefit from reduced cost policies.
Reinsurance protects insurance companies when large numbers of claims come in at one time. The current system for this is extremely complex and inefficient. However, blockchain can make the process much more simple. Blockchain technology can reduce risk by accommodating processes by streamlining the flow of information between reinsurers and insurers on its shared ledger.
Whilst some say blockchain is still in its infancy, we have already seen how much it can impact a number of industries. Blockchain in insurance provides a number of promising use cases and solutions. However, for blockchain technology to succeed in the industry, greater adoption levels will need to be reached.