While almost all industries, especially the banking sector immediately saw a promising future in the blockchain and adopted it, the insurance industry is still stuck in its childhood.

Over the past two decades, the Banking and Financial Sectors have developed exponentially to adopt and adapt to new technologies and it has only proven its worth. The insurance industry, however, seems to be less impacted by even the internet, still, most of the insurance deals and agreements occur offline and on paper, which is supervised and managed by human beings, which only means it is more error-prone. Adding to this is the mere complexity of insurance, involving a number of parties such as consumers, brokers, insurers and reinsurers and a high probability of risk. Every process in the insurance industry is a complicated process that involves the transfer of lots of data and hence is a potential point of failure. Getting past the complications is one big challenge in adopting new technology. The following insights have been drawn from the report “How Blockchain Could Disrupt Insurance“.

Fraud Detection

The blockchain itself is known for its better security. Blockchain can exponentially improve the coordination between insurers thus allowing to detect frauds much more efficiently. The sharing of fraudulent claims can help identify patterns which can help in detecting possible frauds in future. However, data privacy policy and the limitations in sharing personally identifiable information — such as name, address, date of birth, etc is a major challenge in a tech that is driven by data.

Property and Casualty insurance

1. Blockchain technology can transform the insurance Industry by automating claims processing through smart contracts at the same time providing a permanent audit trail, by allowing policyholders and insurers to track and manage physical assets digitally,
2. Blockchain technology could make the process of settling a motor claim as much as 3 times faster and 5 times less costly.
3. Blockchain can help in automating claims processing and calculating liabilities in insurance for all the players involved in the transaction.

Health insurance

1. Securely storing and retrieving data can be extremely challenging and costly, which blockchain can be of great help. Maintaining patient privacy while creating an industry-wide and synchronised repository of healthcare data can be achieved with blockchain.
2. Blockchain also lets the patients control the flow of data, letting them share access to data on a case-by-case basis.
3. The blockchain could also enable granular permissions settings to comply with regulations regarding data sharing while allowing data to be anonymised and shared for research.

Reinsurance

1. Blockchain can help streamline the flow of information between insurers and reinsurers on a shared ledger.
2. Detailed transactions around premiums and losses can exist on an insurer’s and reinsurer’s computer system at the same time, which eliminates the need to reconcile books between institutions for each individual claim.
3. With shared data securely stored on a ledger that cannot be tampered with., reinsurers can allocate for claims in real-time, allowing much faster processing and settling of claims.

Into the future

In over nine years of existence, predominantly in the cryptocurrency space, blockchain has evolved from a tech needed to a tech that is essential for a better and secure transaction. Still under evolution, blockchain promises a lot to the insurance industry, however, it is clear that the tech on its own is not enough to transform the industry when the entire terms and regulations of the industry are outdated and incompatible for adopting the technology. Provided the challenges, we may still see blockchain’s impact at least to a little extent in the near future.