Blockchain has the capacity to bring about a major transformative experience in the world of insurance companies by streamlining operations and enhancing the operational efficiency, customer satisfaction and enhancing security.
Blockchain being a highly decentralized platform where records can signed, transferred and authenticated without the influence of a central control agency. This highly secured platform is capable of creating a very safe and secure working environment for businesses through unmatched transparency, security and trust! This was not possible in the past simple because the decentralized network structures were simply not in place. The system is expected to augment the client customer ecosystems with value addition in every possible step. Today, you can simply define blockchain as single point of truth which is updated in real time or partially real time!
What is so special about a blockchain?
The blockchain is unlike a legacy data storage network where there would be a central data storage location. Here, the entire storage is distributed across different computers ensuring no single point failures. To begin a discussion about blockchains, one must address the key concept of decentralized data storage with immutability. The records stored over a blockchain network are known as a distributed ledger. The users of a blockchain network have access to one set of the shared copy of the ledger. The process of addition of new information to the blockchain begins with information being added to each block. This chain of information is interlinked and interconnected over the network. If someone tries to tamper a block of information without proper authentication, then the resulting action would involve denial of access to the user. Only users with the necessary credentials can make the necessary edits with their actions being time stamped on the hyper ledger.
Blockchain in the insurance industry
The insurance industry has a lot to benefit from the blockchain system of distributed ledgers. Considering the large volume of data sets and the incidents of fraud, the blockchain is setting up a unique system which would secure data and mitigate insurance scams. Blockchain promises to create an ecosystem which would include everyone in the fray of the insurance system.
- Claim management: Taking a test case scenario where company A has a claim against company B, the entire claim management would be conducted over the blockchain which starts with identification, authentication, participation and other necessary requirements.
- Claim verification: Part 1 has claimed insurance worth $1000 from a leading insurance company. The insurance company can get the claims verified using a blockchain since it would log all the customer information and claim settlement verification records. The chances of insurance frauds are very less when the companies switch over to the blockchain mode.
- Processing smart contracts: These are human free platforms which manage the claim verification and fund disbursement process using blockchain hyper ledger verification process. The entire process becomes automated.
- Streamlined payment process: The streamlined payment process helps both parties in paying premiums and making insurance claims at the same time. Blockchain indeed has the capacity to streamline the entire payment making process.
- Take over the legacy networks: The existing legacy networks of the insurance industry can be easily taken over by blockchain based networks to overcome the drawbacks of traditional networks.
- As a technological platform, blockchain promises to remove hurdles for the insure tech companies as well as the customers who are at the receiving end.
Bracing for the ultimate transformation from the standpoint of the insurance tech companies
When internet first entered the market, there were a lot of speculations about its capability when it comes to its capacity to bring about a transformative experience in the world of business. Today, 20 years down the line, we are witnessing the ultimate transformative brought about by the internet. The leading fintech and insurtech companies across the globe must brace for the change, the biggest transformative experience of modern times. It will definitely change the way we look at modern business.