Blockchain is a form of digital database in which transactions are encrypted, recorded and rendered tamper-proof. Each block holds its data in units called transactions or entries, all of which have a timestamp, making it easy to know who tried to add what to the chain at what times.
Some insurance firms are starting to test blockchain technology as a means of streamlining, reducing costs and increasing transparency in a secured environment.
Improved Data Security
Perhaps most prominently associated with the digital currency Bitcoin, Blockchain has garnered wide attention in a growing list of diverse industries as a way to increase the transparency, efficiency and security of digital transactions. Insurance is an area in which advocates are now starting to sing the praises of Blockchain use as a means of building trust. One of the great features of the openness provided by blockchain is that it allows insurers to instantly share verified data, taking the weight off of KYC/AML processes – saving both time and resources. Insurers might also use blockchain to become more efficient in claims processing: in certain industries, claims processing can be automated using smart contracts to update chains at any given time.
Transparency
Through automating claims processing, blockchain features such as smart contracts and data tracking could help insurance companies with transparent, trustworthy dealings that offer faster processing times at a smaller claims cost. With a blockchain-centric system, an insurer can track the entire life of an insured object, from stamp to mint to shelf. Since the system is immutable, insurers will know not only the inherent value of an insured item but also its contextual provenance, giving them a clearer picture of risk even as they provide customers with a clearer, deeper set of data. By integrating blockchains with technological services and mobile app development services, insurers will be able to digitise operations and automate payments, dramatically reduce costly delay between claims and payouts, and eliminate fraud since, once information has been stamped into a blockchain, it will never be able to be changed, and if it has already been stamped in, it is impossible for information to change after the fact.
Automated Processes
Blockchain holds potential to completely restructure insurance with increased data security, greater transparency and reduced overheads – but it will take time and money to bring about these changes. Insurance firms need a sandbox to play with and experiment with blockchain solutions, testing them out and holding them open to contributions from an outside third-party who could develop and integrate them into existing systems. Moreover, a blockchain-based insurer would be able to track and verify data for all parties whose access to the ledger is permitted, enhancing response times and increasing operation efficiencies. An open and verifiable ledger, powered by blockchain, could track an insured object in real time throughout its lifecycle and instantly verify its authenticity, significantly speeding up the processing of claims and payouts.
Lower Costs
Based on these features, blockchain technology enables unprecedented transparency and speed of transactions that insurance companies may use to cut costs and remain competitive in today’s marketplace. Blockchain can be especially beneficial to those insurance companies in the business of expensive items such as jew where authenticity is paramount. With a full history of an insuredchain, insurance companies have fraudulent activity quicker Insurance companies wanting to operate on blockchain will have to invest in new systems, new security protocols and new business models. Their IT departments might not have the staff or know-how to provide this new service, and they may have to outsource to outside experts in blockchain development.
Reduced Fraud
This technology, called blockchain, provides a safe and permanent transaction ledger readable by all its users; it provides ‘a single, authoritative version of events’ which cannot be tampered with, won’t forever disappear and so builds trust between the parties. This step eliminates the possibility of fraudsters filing false claims, faking patient symptoms and histories or doctor medical records, all while giving insurers real-world access to all aspects of code at the point of claims in real time. With blockchain, the industry can see faster payouts, lowered instances of fraud and cost, and improved ways of engaging with customers. The startup ClaimShare reduces double dipping – when someone claims compensation from different insurers for the same incident – with the help of blockchain. This lowers instances of fraud and thereby reduces insurers’ costs.
