Blockchain Technology: What Does It Do To Change The Insurance Market?
By now, you’ve probably heard the term blockchain thrown around, possibly alongside other buzzwords such as artificial intelligence and machine learning.
Initially associated with Bitcoin and cryptocurrencies, the technology is widely considered to have the potential to revolutionize entire industries — including insurance.
But what does blockchain actually mean, and what practical application does it have to the insurance world?
Just to let some people know, Blockchain is a distributed ledger, where the records that exist between counterparties don’t have to reside with a single entity.
Furthermore, information stored on the blockchain, a digital set of records, is decentralized, rather than being held by one person or entity — which has significant benefits.
For insurance, having an indisputable record that guarantees authenticity can address some major problems — not least fraud.
A 2017 IBM report claimed that blockchain-based systems could help “radically improve the insurance industry,” pointing specifically to fraud detection and prevention.
By maintaining the integrity of the asset through various owners, blockchain technology can minimize counterfeiting, double booking, document or contract alterations,” the report said, adding that the technology also has the potential to be used for identity management.
Blockchain could be used to detect identity fraud, and to check claims history and police reports, the insurer said in a blog post.
In this manner, contracts and claims could be recorded on to the blockchain, ensuring that only valid claims are made and multiple claims for one accident are rejected. The addition of smart contracts can also ensure that payments are triggered when certain conditions are met and validated.