How Blockchain Can Expose Insurance Risks

That’s unbelievable but only non-health insurance fraud in the USA is estimated at $40 billion per year. It means that the average US household needs to pay extra $400–700 a year to make up for this loss. Blockchain can reshape the insurance industry in such a way as to diminish this rip-off volume.

Smart Contracts Can Raise ‘Red Flags’

For sure, blockchain can’t ferret out bogus cases with 100% confidence. However, it can signal about suspicious ones. How? With the help of smart contracts.

Smart contracts are built to run transactions against a set of criteria, and they make as many checkups as required to verify them. Only when all the tests are accomplished successfully, smart contracts permit the specified actions. Being blockchain-driven, smart contracts are completely reliable and uncorrupted.

Analyzing the History of Claims

When it comes to bogus claims, usually the same malevolent people are engaged. It means that analysis of the claims history can provide data concerning the potential risks. Smart contracts can scrutinize claims and tease out flagged ones.

The blockchain approach to data storage doesn’t allow changing any previously recorded data. In addition, such a system is resistant to hacking. This means that no claims that can testify of someone’s fraud record can be taken down.

Checking Up Against Fraud Indicators

Have you ever heard about such an authority as The National Insurance Crime Bureau? It analyzes rip-offs and provides insurance companies with a list of fraud indicators. Although this list can be easily downloaded, there are a lot of people who still manage to submit fake claims mentioned in it.

Okay, if you take a look at the list, you can see that there are full 39 pages! Just imagine how much time an insurance company employee needs to make the complete checkup against the list. Smart contracts can carry out this task in almost no time, cutting the workload significantly.

Keeping an Eye on Personal Injury Mills

One of the popular types of scam is fact forging. Imagine John broking his arm. He doesn’t have the insurance and he is out of money for treatment. What can he do? He can act out an accident, with a third-party’s guilt, to be paid by their insurance company. If all the potential participants’ details were stored on the same blockchain, the system could easily check the hospitals’ databases to see whether this exact person has already gone to them with the same problem. If yes, the smart contract will alert to that immediately.

Preventing Billing Fraud

If big market players are unlikely to cooperate with single crooks in cheating insurance companies, smaller businesses can still be up for it. This case of scam is applicable for cases when the company is billing a complainant for more services than needed, or jacking up prices.

Smart contracts can prevent this hoax. If a blockchain stores the pricing of the authorized executors, its smart contracts can trigger payments once the claim is satisfied. Moreover, the smart contracts can benchmark the current solution with the historical ones to detect possibly exaggerated payments.

Making Cross-Checks

As it was said previously, smart contracts can carry out as many checkups as necessary. It means that it’s a powerful tool for cross-checks as well. When smart contracts flag the same complainant against a few checkups, the case can be automatically directed to the responsible bodies. This way, blockchain can significantly facilitate the risks exposure process.

How to Seize the Opportunities

Blockchain can help with the disclosure of insurance scams. Its smart contracts can easily automate the checkup process and provide insurance companies with go-to information immediately. By adopting blockchain, the insurance industry can make the next big step in its development.

But how to become the one benefiting from this? You can develop blockchain-driven B2B software that can facilitate tasks done by insurance companies in order to reduce their fraud losses. One of the most effective ways to do so is to apply the pre-designed features of some blockchain ecosystem, such as genEOS. This will ease up the development process and allow you to deliver ready-made software much quicker.