The use of blockchain in insurance is still in its early stages of inception and implementation. The potential of blockchain technology in sharing data, process claims, and preventing fraud in the insurance industry is indeed intriguing. But companies in this sector still have a long way to go in terms of actively working with start-ups, regulators, and industry experts to figure out the best ways to navigate the potential challenges of the blockchain technology to the realities of the insurance industry. With that in place, it is undeniable that the applications of blockchain in insurance will revamp the way this industry functions. Let us dive deeper into blockchain technology and the perks of blockchain in insurance.
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What is blockchain technology?
Blockchain technology has moved on from a mere buzzword to one of the notable tech trends in most industries. It is a distributed, peer-to-peer ledger of records called blocks that is virtually incorruptible. Every block is linked using cryptography. It is self-managed and does not require coordination from an intermediary. Not just financial transactions, but blockchains can be programmed to record virtually everything of value.
Blockchain in insurance
Not only does blockchain offer the promise of cost reduction and efficiency, but it could also enable revenue growth, as insurers attract new business through higher-quality service. Industry experts at Infiniti Research have curated some of the key benefits of employing blockchain in insurance.
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Improved rate of trust
Industries like insurance and financial services run majorly on the trust between customers and the company. Customers trust these institutions with their earnings only because of the trust that a particular institution has instilled within them. But in many cases, banks and insurance companies do not reveal the exact data to their customers, building skepticism in their minds regarding any further investments. Implementing blockchain in insurance and other financial institutions helps build consumer trust as it provides transparency in transactions.
Timely fraud detection and prevention
Blockchain technology has immense potential to detect and prevent fraudulent activity, making the use of blockchain in insurance extremely compelling. Over the past several years, the insurance industry has been battling with fraudsters and hackers who have duped them of millions of dollars. Blockchain technology will help insurance companies to easily verify customers, policies, and transactions for authenticity using a decentralized repository and its historical records.
Smart contracts and better claims processing
Blockchain technology can solve several issues that both the insurer and the insured currently face. Insurance contracts are often seen as long and confusing for insured individuals, while insurance companies are working hard to protect themselves against all possible types of fraud. With the help of smart contracts and blockchain technology, both insurers and the insured would benefit from managing claims in a responsive and transparent way.
It is a known fact that in the case of changing insurance companies, the data entry process to get coverage and care started is extremely slow and inefficient. Customers also often find themselves in the fear of losing their personal data to fraudsters. Blockchain provides a solution to drive security and efficiency that facilitates personal data to be controlled by an individual while the verification is registered on the blockchain.
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