One of the major tech buzzwords in the current year is “blockchain”, often dubbed as the “next internet” for its potential to impact virtually every industry in the world. At present, since blockchain is the architecture behind cryptocurrency, the majority of people associate it with finance. However, blockchain’s inherent traits make it one of the best solutions for the insurance industry. Moreover, it can be the best replacement for the present database model that is used by the majority of insurers.
How Does Blockchain Work?
The distributed ledger technology makes it possible to share them among a distributed computer network. The major benefit of blockchain lies in the fact that it builds trust between parties that share data. The data is stored in the form of blocks remaining transparent, immutable and tamper-proof. The technology can revolutionize the insurance industry, as it helps to make the information secure, accurate, and trusted.
Blockchain stores information in the form of date, time and dollar amount of the purchase. The second information is stored on the people who are participating, and the third is stored to distinguish one block from others. Since the technology has large storage points, it opens doors for many industries including healthcare, entertainment, insurance, etc. Gartner estimates suggest blockchain will be at a valuation of $3.1trillion by 2030.
Deploying Blockchain Technology in the Insurance Industry
The insurance industry has existed for ages. However, since the process is outdated, policies are still processed on paper contracts, or over call. This leads to the chances of human errors which leads to information loss or misinterpretation.
According to researchers, American consumers lose $80 billion every year due to fraud accounts and casualty losses. This is why, some of the major issues in the insurance industry are efficiency, customer satisfaction, and security.
Blockchain technology can be a better solution that has its own set of hurdles. Therefore, before incorporating blockchain, it is important for insurance companies to resolve their current issues and make necessary changes.
Casualty And Property Insurance
Casualty and property insurance comprises commercial, home, and automobile insurance. According to a survey in 2019, the net premium for the sector is around $1.32trillion. Since processing these insurance require human intervention, there is an open room for errors.
Blockchain technology can help to process the claims faster and cheaper. Using smart contracts, and a shared ledger system to issue insurance claims, automated policies, and payments, will make it faster and error-free. Smart contracts can help make your paper details turn into programmable codes that help to automate the claim procedure.
Detect Frauds And Avert Risks
According to the FBI, the United States reports insurance fraud of $40 billion every year. The conventional ways of the insurance industry make errors and fraud possible. With the help of blockchain technology, insurance companies can battle potential frauds and risks as it would help them to observe skeptical behavior and communicate.
A top global blockchain development company, HashCash Consultants has deployed its very own blockchain insurance solutions which help to compose contracts between numerous stakeholders. It also helps insurance companies to manage financial risks and includes high-volume transactions on a daily basis.
Blockchain technology can improve the industry in privacy, accuracy, and efficiency. It is crucial to understand that any company deploying blockchain must operate with ethical standards. Since the industry involves high security and privacy concerns, blockchain must meet the requirements of the industry. Once the requirements are fulfilled, blockchain technology can transform the insurance industry for the company and consumers.