Blockchain in Insurance
The world is filled with the fact that the insurance industry plays a major role in the list of the largest industries. The primary reason for the utilization of blockchain in insurance is mainly to diminish administrative costs. This area is in need of trust among the involved parties. So, there the blockchain technology gets into the market by protecting the data or information that facilitates a hope factor.
With the arrival of blockchain technology, we at BeyondBlockLabs focus on creating a hygienic relationship between an insurer and the customer. This honorable quality in this field permits simple and easy access with accurate transparency in the particular industry. We help you to alter the way in which everyone handles with the insurance industry.
BUSINESS CHALLENGES IN INSURANCE
There are many challenges in which some of them act as unique to but with consideration of consequential challenges in the industry include:
Predictive Analysis It turns the assurance of latest technologies into commercial successes. To make it happen, this includes improving mobile and web-based services effectively.
Customer Relationship There is a need to make better the relationship among the customers and the insurer in order to run the business in an admiring way with many insurance companies.
Regulation It helps in operating by altering rules in capital requirements, transparency with multiple regulatory and reporting complying customer interaction.
Alternative investments The non-traditional assets that are tedious to manage a complex portfolio with adequacy ineffective alternative source at an economically less grown environment with a low-interest rate.
APPLICATIONS OF BLOCKCHAIN IN INSURANCE
FRAUD DETECTION USING BLOCKCHAIN TECHNOLOGY
Blockchain technology can enhance coordination between insurers and clients combat fraud.On a distributed ledger, insurers may record permanent transactions, with faintly any access controls to protect data security. Storing claims data on a shared ledger would facilitate insurers to collaborate and identify suspicious behaviour across the ecosystem.
Today, major insurers invest in data gathered from the public domain and from private companies in order to better predict and analyze fraudulent activities. Public data can be used to identify patterns of fraudulent behaviour from previous transactions, but it’s often inconsistent due to the difficulty of sharing sensitive information between different organizations. Developing industry-wide fraud prevention is crippled by the constraints around sharing personally identifiable information — such as name, address, date of birth, etc. Introducing blockchain technology to stop fraud would take an enormous level of coordination among insurers, but could be hugely beneficial in the long run.
A proposed counter-fraud blockchain implementation. A blockchain-based effort to counter fraud could begin with the sharing of fraudulent claims to help identify patterns of bad behaviour. That would give insurers 3 key benefits:
- Eliminating double-booking, or processing multiple claims from the same accident
- Establishing ownership through digital certificates and reducing counterfeiting
- Reducing premium diversion, for example, in the case of unlicensed brokers selling insurance and pocketing premiums
Less fraud in insurance interprets on to higher margins for insurance firms, which might result in cheaper premiums for customers.
Property and Casualty Insurance Using BLOCKCHAIN TECHNOLOGY
By permitting policyholders and insurers to track and manage physical assets digitally, blockchain technology will systemise business rules and automate claims process through smart contracts, also providing a permanent audit trail. Blockchain technology could make the process of settling a motor claim as much as 3x faster and 5x less costly. Source: BCGSmart contracts using blockchain technology can turn paper contracts into programmable code that helps automate claims process and calculates liabilities in insurance for all players concerned.
For example, when a claim is submitted with an insurer, a smart contract could automatically confirm coverage, and trigger a request for manual review for losses that meet specific criteria. Smart contracts could save P&C insurers more than $200B a year in operating costs and lower their operating ratio by anywhere from 5 to 13 percentage points, according to BCG.
For auto insurance, a smart contract could be linked to sensors on a vehicle that automatically alert insurers when a crash occurs. The smart contract can then summon medical teams and towing services, launch the claims process, and inform the insured that help is on the way. As new information such as police reports and crash photos comes in, the smart contract can append them to the claim, facilitating a much faster payout process with minimal human intervention.
HealthCare Insurance Using BLOCKCHAIN TECHNOLOGY
A cryptographically secured blockchain will maintain patient privacy whereas making an industry-wide, a synchronised repository of HealthCare information, saving the Insurance and Healthcare industry billions per annum
Blockchain technology can return control of medical data to patients, and let them share access to data on a case-by-case basis.
Rather than forcing insurers and providers to reconcile patient data across separate databases, a blockchain system for medical records could store a cryptographic signature for each record on a distributed ledger. The signature indexes the content of each document cryptographically and timestamps it, without actually storing any sensitive information on the blockchain.
Any time a change is made to the document, it’s recorded on the shared ledger, allowing insurers and providers to audit medical information across organizations. Meanwhile, the blockchain could enable granular permissions settings to comply with regulations, while allowing data to be anonymized and shared for research.
REINSURANCE USING BLOCKCHAIN TECHNOLOGY
Blockchain technology has the potential to upend current reinsurance processes by streamlining the flow of information between insurers and reinsurers on a shared ledger. Using blockchain technology, detailed transactions around premiums and losses can exist on an insurer and reinsurer’s computer systems at the same time, eliminating the need to reconcile books between institutions for each individual claim.
With data shared on an immutable ledger, reinsurers can be better equipped to allocate capital for claims nearly in real-time, allowing them to both process and settle claims more quickly without looking forward to primary insurers for information around every claim.
PricewaterhouseCoopers estimates that the blockchain can deliver reinsurance industry-wide savings of up to $10B by increasing operational efficiencies. This could trickle down and lead to lower insurance premiums for consumers — it’s estimated that reinsurance accounts for 5% to 10% of existing insurance premiums.