How Blockchain Can Save You Money on Insurance
Blockchain and Insurance
Blockchain technology has the potential to transform the insurance industry in many ways. The power of blockchain technology has already been demonstrated in other industries, and has created a range of benefits from greater security and transparency, to greater efficiency and less waste. Now, new platforms are making insurance simpler, more accessible, and cheaper. Blockchain technology is now being used to remove inefficiency in the insurance industry, ultimately reducing your insurance costs.
Why Traditional Insurance Costs So Much and is Inefficient
Insurance companies today suffer from several problems that are caused by outdated technologies and practices. Huge portions of your insurance costs go to administration. Traditional insurance companies require large offices and many workers, often featuring costly HR departments and unnecessarily slow and costly working procedures.
The chain connecting the customer to their insurance is long and filled with many unnecessary chains that increase the customer’s burden. Insurance providers go to massive lengths to avoid fraud, and tackle it where it occurs. Recording information can be quite costly as well, as managing massive quantities of data is not always so simple.
How Blockchain can fix these issues
Blockchain-based insurance offers solutions to many of the most significant causes of high insurance costs. Lack of trust and vulnerability to fraud cost the insurance industry a lot of money. Blockchain provides transparent ledgers of all transactions, which are secured through cryptography. This removes the need for many of the measures that insurance companies take for their own security.
Throughout the process of getting insurance, there are many steps that incur greater costs, even in more efficient companies. Blockchain-based insurance uses automated smart contracts for most insurance processes. A Smart Contract is a binding agreement for an exchange in a transparent, conflict-free manner, without requiring the services of a middleman.
When a claim is made, and the time comes for an insurance company to investigate the claim, further costs arise. The costs vary depending on many factors, but they always require a certain level of attention. Automated smart contracts come into play again here. For small, low risk claims, payouts can be automated, and for larger or more complex claims, all evidence and every step of the process can be recorded on the blockchain.
Almost every step in the process of buying or using insurance is made easier through blockchain technology, which has already demonstrated to be an effective means of creating greater transparency, trust and security — three things that the insurance industry is sorely lacking, while lowering costs by reducing these burdens on the insurer.
One of the best examples would be Black Insure, a digital insurance company on blockchain. Black offers all of the blockchain aspects that reduce the costs of insurance. Black uses automation and employs the most modern blockchain-based solutions to reduce the costs passed onto the customer, and offers insurance brokers the opportunity to connect with capital to launch their own virtual insurance companies. Black seeks to lead the way in blockchain-based insurance.