How blockchain will revolutionize the insurance industry — II
By Danilo Falco
COO & Systems Manager at 4CADIA Factory
In the first article in this series, I explained how the blockchain will revolutionize the insurance industry, with emphasis on its potential for fraud prevention. Today, I explore other aspects involved in this change, which will have a strong impact on the way the market is organized.
Transparency and trust
Insurance customers have little chance of knowing how their data is being managed. The digitization of services has brought more uncertainty to the security of personal customer data information. This market environment marked by mutual mistrust only tends to increase the dissatisfaction of clients who face long claims processing times or who receive claims denials for reasons that were not clear in the initial contract.
To the extent that insurers choose to adopt blockchain solutions, the decentralized ledger can bring a number of advantages. Clients can choose what data is available about them and how it will be processed. Eliminating duplicate records and ensuring their authenticity in a network where data is immutable can facilitate the construction of more complete profiles.
This type of technology is also combinable with machine learning and Artificial Intelligence, which allows automated claims processing, speeding up payments and increasing customer confidence and satisfaction.
It is also possible to automatically check claims or payments made by third parties through personal devices. In other words, a customer can be immediately alerted about the authenticity of a contract he has signed with a broker, a control mechanism to know whether or not he is dealing with a cheater.
This leads us to a third aspect directly affected by blockchain technology in the market. The sale of insurance policies is a complex process that usually requires a lot of paperwork and time from the insurance companies, besides being a constant source of fraud complaints from the customers.
It is very common for unregistered vendors to negotiate non-existent contracts, which creates problems for the insurers’ reputation. Moreover, in many situations, vendors end up negotiating the same contract for different people, causing a big headache for all parties involved when claims occur.
On the other hand, the processing of claims and the payment of claims is also usually very slow. Each of these aspects can be disrupted by blockchain technology. It can enable the automation of claims, claims and payment management, reducing costs involved in the process and making premiums more accessible.
Here, smart contracts appear as a great alternative to traditional paperwork. Used in combination with connected devices, customers, insurers and vendors automatically learn about the validity of a policy or attempted duplication fraud. In addition, it is possible to think of the system in an interconnected way, with the automatic triggering of claims directly connected to anti-theft sensors in cars, for example.
In the next article in this series, I will talk a bit about the cases of blockchain use in the insurance industry that are already changing the face of the market. Just follow me on the net and wait for further updates.