3 Ways in which Blockchain is Transforming Insurance Industry
The blockchain is easily misunderstood as the technology that powers Bitcoins, but it is much more than that. It is that innovative technology which can transform or disrupt any industry.
The blockchain is not just a database ledger technology but is a gateway to the generation of new business opportunities, reduction in transaction costs, and improvement in trust, security, and efficiency of the existing business.
The insurance industry is the one which can significantly be transformed by the use of blockchain technology. We bring you three ways, in which blockchain can revolutionize the insurance industry with a slow and steady pace.
1. Decreasing the chances of Insurance Fraud
One of the biggest challenges faced by insurance companies is the fraudulent claims. It is estimated that insurance companies lose approx. 80 billion US dollars every year to such claims, globally.
Presently, the claim process is dependent on physical validation of the claim information by processes like item authenticity, ownership, history etc. which can easily be manipulated by the fraudsters.
The blockchain technology enables the creation of an authoritative digital record like a “fingerprint” of real-world items, policies, and claims which will be encrypted, immutable, and transparent. These unique digital records are exceptionally difficult to be hacked or forged preventing any kind of possible fraud. Moreover, they can be used to track and verify the value of the physical items throughout their life.
2. Real-time insurance for sharing economy
The evolution of the sharing economy has generated opportunity for dynamic insurance products which focus on the challenges deep-rooted in using personal assets as leverage for commercial purposes.
The blockchain technology facilitates short-term insurance contracts for the sharing economy by providing on-demand, time-stamped secure records of insurance without the need of a centralized body. This cost disruption made feasible by blockchain is opening a whole new market.
3. ‘Smart Contracts’ for new Insurance markets
The capability of blockchain technology to create “smart contracts” is considered to be the most powerful and useful for the insurance industry.
The smart contracts are actually the programmable logic which self-execute as any pre-determined condition is met. The potential to automate and act without the need for any third party intervention make them tremendously cost-effective in terms of any type of contracts including insurance claims.
The blockchain technology is in its early phase yet rapidly growing with the significant amount of capital and may innovative minds being involved in it. Since it is pretty early to predict the impact of blockchain technology, this is the right time to formulate a blockchain strategy and think of potential ways that this technology can help using controlled experimentations and testing.
Blockchain technology is a vast new concept which opens up a whole new world of possibilities. So if you do not want to be left behind and are interested in learning more as to how blockchain technology can serve your business, reach out to us for the free consultation.
Ashish Sharma is the Chief Marketing Officer at WeDigTech, a blockchain app development company. He is responsible for marketing activities that have to do with creating, communicating and delivering offerings that have value for clients or business partners.