Business specialists through plenty of industries are at present dealing with different effects of the blockchain technology. One industry where requiring a decentralized, encrypted, and indisputable ledger of transactions can have a huge influence is ‘Insurance’. Amongst the numerous financial segments, Blockchain technology can transform the insurance industry by systematizing inefficient and traditional insurance methodologies.

Insuree pain points

1. The Customer Experience
   Insurance was ranked with worst industrial customer experience. I think we all know that in order to initiate a claim there is often a complex questioner, there are physical sheets; because of these there is a big room for improvements within the customer experience.

2. Affordability
   Automobile insurance and homeowners insurance. Blockchain could help with these potentially by lowering costs for the insurers, and therefore the insurers can peak potentially lowering premiums across the board.

3. Product Innovation
   Parametric Insurance: Peer-to-peer insurance which makes payment upon the occurrence of a triggering event. So product innovation is certainly an element in which blockchain technology could help.

4. Emerging Markets
   As there is a low cost for insurers, it may be possible with new product innovation to increase their service as well as increase markets.

Insurer Pain Points

1. High Administrative Costs
   The cost of record keeping within the industries is quite high. An insurer needs to verify identities as well as contract validity. They also require registration of claims and lost payouts. The cost associated with these are quite high, and it may be possible to utilize blockchain technology to cut down those costs.

2. Costly intermediaries
   There is also expensive intermediaries. The insurance industry is directly in contact with intermediaries which may involve in various ways, but with blockchain there is no need of middleman as it comprises shared nature and therefore make the product less expensive in general.

3. Fragmented Data Sources
   According to the survey, 93% of insurance CEOs see data mining and analytics as strategically important; not surprising. Yet this process is complicated as insurers need to establish relationships with third parties, data renders and so on. So it’s potential for the Fragmented Data Sources with the blockchain to come together.

4. Frauds
   This industry is very much full of fraudulent activities. The U.S. auto industry alone claims fraud and build up added about 7 billion in excess payments. With a shared ledger, it is impossible for anyone to change the information once added. It will help in keeping eyes on every activity.

How blockchain will be a game changer?

Fraud prediction through superior transparency

Claims of Insurance is a distributed procedure that comprises multiple parties such as insured, insurer, regulators, third parties, and much more often with not enough transparency to the participants. But when it comes to the blockchain it can store transactions at every point through the whole transactional lifecycle, from binding a policy contract, the irreversible life record of that policy/policyholder can easily be tracked.

It will offer you important benefits such as

• Remove the issue of double-booking, or dealing numerous claims from the same accident.
• Start ownership with digital certificates that ultimately reduces forging.
• Decrease premium diversion

A lesser amount of fraud in the insurance industry renders higher margins for insurance corporations, which can serve their customers with cheaper premiums.

Property & casualty (P&C) insurance

P&C insurance is collecting the essential information to assess and process claims that insure stuff such as houses and cars. It necessitates a lot of manual data entry as well as coordination among multiple parties. By enabling policy owners and insurers to record and manage physical assets in a digital way, blockchain technology can organize business procedures and automate claims processing with smart contracts while offering an enduring audit trail.

Health Insurance

Health insurance today is suffering from an exhausted ecosystem of patients, insurers as well as providers. It is very difficult to manage medical details from multiple doctors and specialists. Medical records get disconnected from different healthcare providers and insurers. Duplicate and specious records across different organizations lead to high administrative cost as well as unnecessary procedures for patients.

A secured blockchain can preserve patient privacy and enable them to manage their medical data. Instead of pushing insurers/providers to merge patient data across distinct databases, a distributed ledger technology can store a cryptographic signature for every record. The signature indexes the content of every document cryptographically and provides timestamps, without a need to store confidential detail on the blockchain.

Reinsurance

Reinsurers offer insurance to insurers in a mysterious and inefficient system determined by paper-based contracts as well as manual procedures. With the peer-to-peer distributed data on an unchallengeable ledger, reinsurers can assign capital for claims in an improved way closely in real-time, It is letting them process as well as settle claims more rapidly without being dependent on prime insurers for data around every single claim.

The decentralized system provided by blockchain serve the possibilities to turn over existing reinsurance procedures by reforming the flow of evidence among insurers and reinsurers on a distributed ledger. With the help of blockchain, transactions regarding premiums as well as losses can be present on an insurer and reinsurer’s PC at the same time which aids to reduce the need to settle books among organizations for every single claim.

If you are an insurer and want to leverage the distributed ledger technology known as blockchain, think through the following:

• Begin with the evaluation on how blockchain supports existing IT strategy.
• Do planning for the development of capabilities and realize the potentials of blockchain in numerous businesses.
• Take the lead by driving the acceptance of blockchain based service through numerous business stakeholder.
• Sell blockchain’s huge potential to make more safe and efficient operating systems, proficient enough to accommodate disruptive business models.
• Think through joining large industry groups; or work to make smaller groups with significant stakeholders.

The future

Globally, the property and casualty industry had above $2 trillion in grow written premiums in the year 2016, as per the first All-Blockchain Insurer explosion. Blockchain can assist the global P&C insurance industry to decrease its mutual functioning ratio by 5 to 13% while making over $200 billion additional in technical margin from the existing growth level in written premiums.

What’s going on in insurance industry with blockchain technology?

• PolicyPal Network, a decentralized insurance protocol ecosystem just launched their new blockchain based Flight Delay Insurance that is completely automated, guaranteed by ERGO and offered by PolicyPal Singapore.
• With the use of blockchain technology and self-governing smart contracts, Tontine Trust anticipates offering a more proficient and safe version of the old tontine system, by saving a lot of money for subscribers.
• THEKEY enters into Cooperation with the Chinese Government on Research into Social Insurance Blockchain Applications.
• I-Chain is a blockchain-based platform that strives to offer consumers with insurance services that are completely reliable, open, as well as easily accessible globally.
• Iowa aspects to approach for the blockchain technology in insurance.