Blockchain: Providing Streamlined Processes For The Insurance Industry
In the past few years, we have heard the discussion on Bitcoin permeate in almost every industry. News and hype surrounding the cryptocurrency were ubiquitous as speculation abounded. If Bitcoin, then, is the hype, Blockchain has the potential to be the force which drives change not only in our vocabulary but revolutionizes the way we do business. Since its creation as the underlying technology that Bitcoin operates on, organizations across the world have been exploring ways to implement this technology and develop new ways of delivering their services to their clients, such as streamlining their operations. Not since the introduction of cloud computing has a piece of technology made such an impact on the ways in which businesses can operate with their customers and partners.
The blockchain network lives in a state of consensus, one that automatically checks in with itself on a regular basis. As a self-auditing ecosystem of a digital value, the network reconciles every transaction that happens at regular intervals. By allowing digital information to be distributed but not copied, blockchain technology is creating the foundation for a new type of Internet.
The blockchain isn’t siloed to the financial or retail industries. It is a technology, which allows secure international transfers, regardless of the value of the unit being transferred. Subsequently, it has the potential to revolutionize industries that are primarily run on written contracts, such as the insurance industry.
Information held on a blockchain exists as a shared and continually reconciled database, meaning at the moment it would appear as blockchains are just as secure as a locked vault. With blockchain being a decentralized system and is continuously evaluated and regulated by the users it is in principle extremely safe for the distribution of smart contracts. For industries which require collaboration between stakeholders, a private blockchain can remove the inevitable manual admin that underpins any major contract between multiple stakeholders.
Blockchain and the Insurance Industry
Although it has a reputation for conservatism when it comes to technology, the insurance sector has recognized the benefits of technologies such as AI sooner than many other industries, leading the charge in cognitive computing implementation. Tata Consultancy Services’ (TCS) recent Global Trend Study on Artificial Intelligence shows that the insurance industry records the biggest AI spend per company, and across different industries currently implementing AI, insurance ranks 4th with an average cost reduction of 13.8 percent as a result.
Although the insurance industry is currently suffering from a wait and see mentality, many believe we’re on the precipice of companies having the capability to run their entire company on a blockchain. With consumers no longer content with long lead times, the slow drawn out process of brokers negotiating contracts and constantly making small amendments to a single master document is potential drawing to a close. Especially as consumers are starting to understand efficiencies and security measures implemented into blockchain systems.
The future implementation of a blockchain
Individual insurers across the industry have begun to allocate significant resources to researching and implementing working private blockchain systems. For instance, Swiss RE, a leading global insurer, has teamed up with the likes of Allianz, Zurich, and Aegon to create a ‘Blockchain Insurance Industry Initiative B3i’ aiming to explore the potential of distributed ledger technologies to better serve clients through faster, more convenient and secure services. It is predicted to gain a 30 percent increase in efficiency compared to traditional processes, achieving this by reducing reconciliation, duplication of work and waiting times. Another one is us here at Inmediate. We believe that by having a platform or an ecosystem where smart contracts can be transacted, we can fill that gap and bring policies to the market in a much convenient, consistent, and coordinated manner.
And as a conclusion, although we are still a few years from seeing a blockchain being used in the mainstream insurance industry I believe the significant research being carried out and the working PoCs that are currently on the market is exponentially speeding up the process. The benefits will be hard to ignore, from smoother claims processes and improved efficiencies to fraud prevention and pay-as-you-go (usage-based) insurance. Once insurers trust a blockchain to securely transfer information, its implementation into the industry will only be a matter of time.