Blockchain in insurance 2021

The insurance sector is also turning to this solution. Blockchain means greater data security.

Starting from banking

The banking industry was the first to recognize the potential of blockchain technology, followed by others. Currently, it is increasingly used in the insurance sector.

In 2018, a B3i consortium was even created, associated companies such as AIG, AIA, Allianz, Aegon, and Swiss Re.

It is focused on creating blockchain-based solutions for the insurance industry. One of them is the B3i Reinsurance application (B3i Re), which is used to conclude and manage contracts.

What can blockchain do for the insurance industry?

Blockchain technology can bring many benefits to the insurance industry. First of all, it has a positive effect on the level of security during data processing and simplifies the claims handling process. It also contributes to greater effectiveness in detecting insurance fraud and promotes the introduction of new insurance products to the market.

Data Security

The security of the processed data appears to be of utmost importance in the context of the use of blockchain technology by insurance companies. This is due to the fact that as part of their activity, they process it in large quantities, and very often what is called sensitive data. Therefore, attempts to take over them by cybercriminals are quite frequent.

This is favored by, among other things, collecting most of the data in one place, for example on a single server. Therefore, Decentralized blockchain technology makes them much more difficult to steal. What’s more, it also prevents modification of data by third parties, which further increases the level of security. However, it must be emphasized that neither blockchain nor any other technology can guarantee complete security.

As security evolves, hackers find more and more ways to attack. However, this does not change the fact that Decentralized systems are slowly becoming the standard, both in the insurance industry and in many other areas of human activity.

How can we infuse blockchain into the insurance sector?

In the banking industry, blockchain finds is application in almost every section, ranging from customer-facing payment technology to trading and exchange services. Yet, the insurance sector lags behind technologically. But inculcation of blockchain technology may bring about positive changes such as relatively lower customer engagement, digital backdrops and limited expansion.

Blockchain will have a 3-way impact on the insurance sector:

Unveiling new opportunities of products and services

Since blockchain offers an effective peer-to-peer network, a widely distributed and reliable ledger for storage of consumer information and smart contracts, it has the potential to take the insurance sector to new heights.

How this being put into practice is again a three-dimensional procedure:

Attracting customers and eliminating from their minds, the fear of losing of losing their personal data. As in case of blockchain, personal data of a user will be stored on the customer’s personal device and retrieved only for validation.

Blockchains, with a feature of efficient modelling of P2P and smart contracts, can be effectively applied to an insurance environment at low handling costs because of availability of automated reliable resources.

Further, if we look up to a more technologically advanced asset of blockchain technology, we have Internet of Things. This technology will enable every device to register and administer its insurance policy itself through smart contracts. It will automatically detect damage, set off for repair and request for claim from the policy.

Elevation of competence

Some 5-10% of the claims made by policy modellers are fake or fraudulent. However, blockchain technology can used to validate the personal details of consumers and policy matters, tally up with police’s report of any theft or fraud in the history and confirm purchase details of sanctioned policy.

Slashing down costs due to autonomous nature

Blockchain cuts down cost by creating an automated verification platform for authentication of identity of policyholders and validation of contract, register data from third parties, and check for payouts of claims.

There is hardly any industry that has not paid attention to the blockchain technology. From gaming to platforms to cloud storage, the blockchain technology has ventured every industry. And recently it has drawn the attention of the financial services industry as well. In spite of having no impressive app or any flairs like that, the blockchain has a strong case to be laid down as the rudiment technology for the insurance industry. Its potential for complete accountability and security can resolve a number of problems faced by the financial and insurance sector today.