The Role Of Blockchain Technology In Insurtech

Blockchain technology is already helping insurance companies to save time, improve transparency, prevent fraud, comply with regulations and develop better products and markets ever since.

The cost of insurance fraud globally is amounting to over a billion per year. The good news is that insurance companies could improve claims processes 3 times faster and 5 times cheaper by using blockchain technology.

Blockchain technology is a distributed and decentralized public ledger, which is responsible for the powerful record-keeping technology behind Bitcoin.

With every blockchain transaction, insurance companies can tap into the rich deposits of resources to improve the way they do business.

How Insurance Technology Is Using Blockchain?

Blockchain can help to fix fraudulent claims and other problems using decentralized systems.

Let’s examine some use cases of blockchain in the insurtech industry:

1. Claim management

One effective way to ensure that submission and processing of claims are as secure, convenient, and consumer-friendly as possible is leveraging blockchain.

Blockchain has the potential to seamlessly combine numerous data points from various sources (based on the location and analytics). When this happens, it can lead to a great reduction in the number of fraudulent claims.

Insurance companies can tap into a distributed blockchain ledger, which is responsible for distributing many streams of information and documents. This can include third-party reports, scene evidence, police comments, and so on.

Some of the vital steps when submitting claims can be completely automated. For example, an auto crash can quickly trigger a new claim initiation, while sending signals to the medical and/or mechanics support, everything happening at the same time.

2. Reinsurance

Reinsurance is another delicate aspect of insurance. Blockchain can facilitate the ease of processing data as well as holding it a distributed ledger.

This will ensure that reinsurers receive verified real-time data without any form of adulteration due to third-party influence. Getting accurate real-time data is crucial, whether you’re investing in stocks or venturing into online investments.

In other words, they can receive data directly from the primary source, without having to involve their counterparties — insurers in this case.

Blockchain technology is also fostering faster and more efficient capital allocation — to help satisfy upcoming claims.

The merits are enormous, especially when you understand how insurance companies operate. In most cases, they deal with several reinsurers that may be interested in the same contract.

In this case, the reinsurers are expected to exchange the data readings between each other — thus, complicating operations and mounting pressures even more.

Blockchain technology offers a quick fix to this problem. Since it uses a shared ledger, the challenge of reconciling transactions for premiums and losses between the insurer and the reinsurers is minimized (or eliminated), because the system will always be up to date.

3. Peer-to-Peer Insurance

Peer-to-Peer Insurance (P2P Insurance) isn’t a new concept. It’s been in operation for a long time. However, Blockchain technology is inspiring insurers to embrace it wholeheartedly.

Truth be told, designing smart contracts that will facilitate the ease of damage reimbursement due to bad weather conditions that might damage properties, is one of the sole responsibilities of insurance companies.

These contracts are designed according to all manner of measurements, including weather readings and sensor data, as the case may be.

The goal is to make these claims less subjective and more reliable.

Today, smart contracts are truly ‘smart’ as they are now fully leveraged in peer-to-peer insurance marketplaces.

Blockchain has made this possible, ensuring that for these specific types of insurance entities, policyholders can collect higher premiums for the service as compared to the traditional insurance contracts.

Blockchain in Insurtech

The insurance industry is battling with a ton of operational inefficiencies ranging from complicated claims management, loads of paperwork that leads to poor customer experiences, and fraud.

Enter blockchain. A powerful decentralized system that provides stakeholders with the essential tools to boost operational efficiency.

It provides the digital means and hub for the smooth flow of data streams and transactions.

In conclusion, blockchain has gained a lot of attention and traction in recent years. And as we move forward, it still has the potential to transform how insurance companies operate in coming years, especially in this evolving digital age.

Inmediate is an insurtech startup from Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger, and NLP, making insurance processing and underwriting fast, cheap, and flexible. That gives for better processes, lower costs, improved time to market, and new revenue opportunities. To know more, visit our website today at inmediate.io.

Introducing Inmediate: a platform on which customers, distributors and insurers using smart contracts connect. https://inmediate.io