Benefits of Blockchain in the Insurance Industry

Benefits of Blockchain in the Insurance Industry

Blockchain is one of the fasted growing technologies emerging as an eminent element of the IT industry capable of reshaping almost every business industry. the potential of this technology is yet to be explored. Several industries are benefited from the dynamics of blockchain and the insurance industry is not an exception. Blockchain is giving a rise to the use of centralized data making organizational operations much easier and more effective by removing all hectic paperwork. If you talk about the insurance industry, blockchain is helping them to add transparency to their work culture and satisfy their customers with an exceptional experience. The blockchain in the insurance industry is playing a vital role by helping companies to maintain a digital ledger that is updated with every new transaction made in the network.  

In today’s competitive world, where every industry is jam-packed with a plethora of options to serve their targeted customers, every company is trying to take a lead over the market by serving the best experience to the customers.  

There are several advantages of blockchain in the insurance industry but before understanding the benefits it is important to understand what blockchain is and how does it work? Blockchain is a digital distributed ledger having three major pillars, i.e., immutability, trust, and transparency.  

Features of blockchain that makes it imperative for the insurance industry: 

  • Smart contract: 

The smart contract is a transaction functionality that allows the application to automatically control and execute documents relevant to the programmed event. With the introduction of smart contracts, blockchain has eliminated the mediators and has facilitated users to transact any value without any mediator. With smart contracts, insurance companies can track the payments and also track the accountability of both nodes. 

  • Advanced automation: 

An insurance channel is a connecting bridge for multiple nodes that includes insurance providers, clients, and healthcare providers. The inefficiency of a channel may chock-full the channel making the management difficult and adding inefficiencies to the insurance provider services. Blockchain in the insurance company helps them to automate almost their transaction, data recording, tracking, and management.  

  • Cyber security: 

Data of an insurance company is compiled of personal data of all the customers which is sensitive to hacking. As the insurance channel interacts with various segments simultaneously, it is more susceptible to theft. Blockchain helps to reinforce cyber security by giving a decentralized digital ledger that automatically updates the ledger with each transaction and makes the records immutable. The technology included in blockchain makes alteration impossible and hence makes the channel robust and secure.  

  • Easy claim management: 

With the progressing time, insurance companies have widened their approach and now they are offering insurance policies of various types and hence can grab the attention of more and more targeted customers. This rapidly growing number of customers is making claim management a hectic task for insurance companies. Blockchain in insurance companies is helping them to keep a digital detail of their clients and automate most of the policy claiming procedures along with the authentications.  

Use case of blockchain in the insurance industry: 

The entire insurance industry can be benefited from the potential of blockchain. The features offered by the blockchain technology can be precisely tailor-made for the insurance company keeping the requirements and its services as an imperative input. A certain use case of blockchain in the insurance industry that has been used all across the industry are listed below: 

  • Easy KYC and anti-money laundering process 
  • Reinsurance  
  • Easy claim management 
  • Peer-to-peer connection 
  • Simplified underwriting process 
  • Document management and auto-updating 

Advantages of blockchain in the insurance industry: 

Implementation of blockchain in an insurance company is having the widest range of benefits, a few of those are listed below: 

Trustworthy: 

An insurance channel needs reliability as it is dealing with sensitive data and money transactions. Blockchain can add a specific algorithm to your application that makes it robust against all type of malicious activities and make the data immutable.  

Automation: 

The insurance industry is widely dependent on data management, right from the record-keeping of client profiles to the claims. Executing each of these operations manually can be time talking and also prone to errors. As blockchain uses a smart contract, each of the activities is executed automatically making the task easy, swift, and of course accurate. 

Customized policies: 

Blockchain can be successfully integrated with other latest technologies, such as artificial intelligence, IoT, and machine learning. It will help you to know your customers better and offer them a customized policy. For example, if a customer wears a fitness watch and agrees to share the information then you can easily track their health condition by using IoT and storing it in the decentralized ledgers. 

Fraud detection: 

A fake claim is one of the major issues faced by insurance companies. Blockchain can help you in understanding the veracity of the statement, as it can track complete customers’ data automatically. 

Cost-effective solution: 

Integration of blockchain helps insurance companies to cut down various unnecessary expenses. Traditionally, insurance companies were completely running over manual execution and were widely dependent on agent and mid-person for customer accusation, retention, and also to verify the claim statements. Integration of blockchain in the insurance industry has helped them to eradicate most manual work and automate their tasks making it swift, taking lesser time, and hence cost-effective. 

Conclusion

Blockchain offers the widest range of applications in the insurance industry, right from the signing of an agreement to processing the claims. It is becoming one of the finest technologies when it comes to the insurance sector. By using blockchain, most insurance companies are now capable to serve their customers with better services which is much swift, safe and customized. This is one of the reasons for the expansion of insurance companies. For example, earlier insurance companies were only offering solutions for medical care, but it has expanded its wings to travel, vehicle, property, and more.  



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