Blockchain Technology for the Insurance Industry
The adoption of Blockchain in the Insurance industry will lead to significant impact and changes in the sector. At present, the insurance industry is still using manual methods of running business processes that are slow, inefficient, and insecure. With such arrangements, customer data is not readily accessible resulting in claims still take approximately three months for approval, which is a very long time for the insured. That too when people avail insurance to meet with contingencies at the time they happen. Furthermore, since the data is passed on through various hands before getting the claims processed, it can also be said that the insurance industry is a shady place to be for now.
Whether you knew it or not, the insurance industry is the most substantiated playground for fraudsters worldwide, resulting in high premiums and insufficient coverage for consumers. As per a survey carried out by PwC, over 52% of insurance fraud happened due to the people inside the organization. This results due to a lack of transparency of data between the insurers and consumers, which therefore leads to distrust of consumers and unhappy clients.
Hence, the insurance industry desperately needs to implement its processes to win back the trust of customers by putting a stop to fraud and upgrading their work systems. Blockchain serves this purpose altogether and is being adopted by many big companies worldwide like Allianz, Ever ledger, AIG and Standard Insurance.
Let’s see how it’s going to make an impact if embraced by all.
5 Ways Blockchain for Insurance Will Make Impact
Some of the most likely changes that blockchain will have on the insurance industry are as follows-
1. Redeem Customer Trust
Blockchain in insurance industry is helping in rebuilding trust between insurers and policyholders via the use of a transparent system. The data is available for both the insurers and consumers to see, thus keeping customers aware of what is happening with their claim.
2. Higher Efficiency in Data Collection and Storage
Since blockchain is an entirely automated system, it does not require manual labor to enter each type of data in its operation. The platform is flawless and encourages a robust and more efficient method of collecting data and storing it in different systems that can be accessed from everywhere and at any point of time.
3. Better Processing of Claims via Smart Contracts
The blockchain is a completely automated process and eliminates manual labor. Hence, claims process faster.
4. Higher Security and Easy Detection and Prevention of Fraud
Blockchain removes the creation of false and duplicate documents in the process, thereby, eliminating the chances of fraud both from the insurers end as well as from the customers. The data in blockchain is tokenized once entered and hence is tamper proof. With such arrangements, fraud can also be detected from its root and curbed right there, in a way preventing massive losses
5. Better Understanding of Customer needs
Blockchain assists in the collection and assimilation of vast chunks of customer data (KYC) and then getting it organized. Insurers have a better understanding of their customer needs this way, which in turn allows them to advice better premiums and policies.
A Case Study
Sofocle, a leading innovator in customized blockchain solutions aims at creating Blockchain concepts and converting them into Enterprise solutions to solve real business problems.
SofoInsure, a product of the company utilizes Smart Contract, AI and Mobile App to Automate Insurance Processes. The design of the product is such that while keeping in mind the drawbacks existent in the insurance industry. SofoInsure aims to minimize paperwork via a mobile app. The product works efficiently by creating Smart Contracts of the insurance agreement made between the insurer and the insured, which is coded to get executed autonomously if specified conditions get fulfilled. With SofoInsure, an insurer can drastically reduce the operational cost involved in collecting & storing documents and processing claims.
Final Takeaway
Blockchain technology for the insurance industry, whether it is for auto, travel, or life insurance assures transformation in several areas that will include many factors like client onboarding, claims to process, and secure approvals. Blockchain comes with the promise of eliminating outdated systems and enabling easier communication of information without risking client privacy. Insurance companies are already taking on this new platform and winning over clients, and it is time for those, who have not incorporated it to understand the platform’s potential and accept it for better success.
