Wisdom Oparaocha On The Future of Insurance on leveraging Blockchain
The traditional insurance business model has shown to be very robust throughout the years. Although, like every other business model, traditional insurance is starting to feel the digital impact as new technologies alter how customers interact with businesses and how products and services are supplied.
The traditional insurance business model has shown to be very robust throughout the years. Although, like every other business model, traditional insurance is starting to feel the digital impact as new technologies alter how customers interact with businesses and how products and services are supplied.
Blockchain is one of these emerging technologies. For example, the record-keeping technology behind bitcoin is Blockchain, a distributed and decentralised public ledger. Blockchain transactions are free to use and have the potential to revolutionise the way insurance is purchased.
Using public ledgers and a strengthened cybersecurity protocol, Blockchain is filled with the potential to improve efficiency, security, and transparency for the entire insurance business. One of the most significant advantages that Blockchain may give is cost reduction.
It’s easy to understand how Blockchain can affect claims, administration, underwriting, and product development, and most blockchain use cases so far have centred on cost-cutting measures.
By validating coverage between corporations and reinsurers, Blockchain has the potential to help automate claims operations. It will also streamline payments between parties for claims, lowering insurance firms’ administrative costs.
As much as Blockchain is filled with numerous potentials to improve and impact the insurance business, the Blockchain and cryptocurrency industry is generally filled with risks. This begs the question of insurance in Blockchain as well.
As blockchain technology and smart contracts continue to be at the leading edge of modern technology, the risk implications continue to grow as well. Thus, there is a need to position well for insurance. Additionally, millions of digital assets enabled by blockchain technology have been hacked in high-profile attacks, necessitating digital asset cyber insurance demand.
Forms of Insurance for the Blockchain and Cryptocurrency Industry
There are several types of insurance that businesses in the blockchain industry need to pay attention to. Here, we look at a few of them.
Professional Indemnity: Just because blockchain technology is based on a distributed, zero-trust architecture doesn’t mean it is bug-free or cannot be abused. Professional indemnity shields blockchain experts from claims that their technology services, such as DeFi or CeFi, have caused a third-party financial loss.
This could be due to a software fault, losses incurred due to professional carelessness in the execution of transactions, unintentional copyright infringement, or a contract breach.
Cyber Insurance: There have been several hacking cases within the blockchain industry, from NFTs to Private keys and discord servers. Although Cyber insurance does not cover the theft of your private keys, it does cover data theft, ransomware attacks, cyber business interruption, and denial of service assaults (among others).
As a result, this insurance is quickly becoming a “must-have” for businesses in the blockchain industry, with most commercial contracts requesting it.
Directors and Officers Liability (D&O): If you’re a company director or officer, your decisions on behalf of the firm could jeopardise your assets. D&O is an important must in an ever-changing regulatory environment like the blockchain business, whether it’s seeking to attract new investors or protect existing ones.
Crime Insurance: The security of private keys is critical in the blockchain industry. If you’re keeping private keys for yourself or others, you should think about how to insure them and handle the risks that come with storing cryptographic data.
Both hot and cold wallets have insurance options, although hot wallets are more difficult to locate due to the higher-risk nature of this architecture.
Several aspects of the blockchain industry have been insured in time past ranging from Tokenisation platforms, NFT verification networks, exchanges, custodians, blockchain developers, DeFi, mining operations, and many more. In addition, there are several other insurance applications for blockchain technology, such as property and casualty insurance and Fraud detection and risk prevention.
While the future of the insurance industry and blockchain technology seems to be very promising with numerous mutual benefits, the implementation of the technology is still in its early stages. However, several start-up organisations are pioneering the use of Blockchain in the insurance industry and bringing insurance to the blockchain industry.
One of such is Go SuperScript, an insurance business focused on providing insurance expertise with legacy-free tech such as Blockchain technology.
Contents distributed by Learn.Block6.tech
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