What the Blockchain Technology Would Have on The Insurance Industry
Much has been made about blockchain’s utility across different industries. Critics oppose the technology is mere hype, that the alterations it makes is marginal and not worth spending money on. Supporters, on the other hand, willingly acknowledge that blockchain is not the answer being trumpeted in some corners, but also identify that there are use cases where it essentially makes sense. This is why noteworthy resources are being devoted to the study of the blockchain system/technology by some of the world’s major establishments.
Insurance is one such industry, but in fact, blockchain is exactly what’s required to inoculate some revolution into an industry that has not transformed much in decades. From global insurers down to start-ups, we are seeing a wave of new goods and services, everything from flight delay insurance to enhanced risk modelling. What we need to understand what it is about blockchain that makes sense for the industry, if you want to know more, then read on.
Information sharing
Imagine a situation where insurance firms can share customer KYC data instead of having to inspect every individual that requests to buy insurance. It could mean savings of thousands of dollars per customer. Blockchain makes this possible by allowing multiple insurance firms to contribute data to the same decentralized ledger. And because the data is immutable, the insurance companies can trust that it is authentic. One such information are claims records. If insurance companies contribute information to the same blockchain, duplicate claims can easily be detected.
Transparency
Historically, consumer data has been stored behind the walls of insurance companies. Consumers have little in the way of visibility of this data, and instead are given only what the insurance company decides via a portal. And if the information is shared with third parties, the consumer is not notified about it. The open and decentralized nature of blockchain means that consumers will always be able to see the data the insurance company has and what is being done with that data.
Trust
It is not unusual for consumers to mistrust insurance companies. Confusing policy terms, high premiums, and long claims processes all contribute to this. The blockchain, specifically smart contracts, bring trust back into the equation by simplifying the insurance contract and, with the help of AI, automating claims. No human intervention required.
Tokens
One reason the privilege pay-out process is slow is the need for fiat currency cheques or bank transfers. Consumers occasionally wait for weeks for the pay-out to show up in their account. Using digital tokens accounted for on the blockchain answers this problem. Pay-outs can be made promptly and then be re-used to purchase added coverage.
Smart contracts
Smart contracts are programmable contracts devoted to the blockchain. They are independent and, therefore, do not need human intrusion. For the insurance industry, smart contracts enable micro-insurance guidelines to be issued and claim pay-outs to be pre-programmed.
Lower costs
What all of this adds up to is lower premiums for consumers. Personalized insurance coverage has never been so affordable. Hearti is committed to providing the most innovative and hassle-free insurance products to its customers. Blockchain is one of the technologies that will help us get there.
Fraud deterrence
Fraud is a major problem in the insurance manufacturing, costing an estimated 80 billion USD each year(1). Blockchain, smart contracts, and AI can help reduce this figure by demanding info verified by AI from multiple sources before paying out a claim. And the immutability and decentralization of blockchain allows insurance firms to share fraud data.
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