Expected to grow to a staggering 280 Billion USD by 2020, the Insurance Industry has tapped growth that some industries can only dream of. With a higher population who possess more significant amounts of disposable income and with the standards of living continually being on the up rise, the Insurance Industry brings in tremendous amounts of business. The Insurance Industry along with other financial industries are known to be fond of the wonders of Blockchain as they try to tame its superpower potential to solve most of the problem areas.
Blockchain mainly empowers Insurance industry by eliminating any kind of security and tracking opacity that results into delayed payments and a jeopardized flow of work. Smart Contracts omit the chances of human error in an Insurance Industry framework where Blockchain enables automatic obligatory actions. Thus, there prevails a sense of trust, as each transaction, each payout, each piece of information concerning premiums are always available to all the members existing within a Blockchain Network. Besides, the AML and KYC verification aspects of Blockchain unleash the real power of the Insurance Industry as it can finally handle fraudulent claims with ease.
The Distributed Ledger Technology of Blockchain makes it a cakewalk for the underwriters at the Department of Underwriting, where the authenticity of claims is verified. Blockchain stores within itself, a repository of data where each datum is stored after validation and verification. Underwriters can be heavily automated by this security enhancing aspect of Blockchain. Provenance or claims processing departments can also use the advanced features of Blockchain. The massive volume of data that need to get verified by different human checkpoints often takes too much time and makes it a tedious affair for both the insurer and the user. Blockchain networks can verify vast amounts of data within no time thus facilitating a quick and efficient problem to this challenge. The data that is stored within the Blockchain network are immutable. Besides, the decentralized storage system also allows no formal central organization to control and maintain the flow of data.
Secure cryptography of a Blockchain network also helps the Insurance industry in the client onboarding process. Client onboarding is an exhaustive process where the insurer has to spend long hours verifying each piece of document that has been provided by the user. Blockchain networks can easily verify customers by running secured background checks that take the stress off of client onboarding process.
Many Blockchain and InsurTech companies are already gearing up for the implementation and launch of Blockchain technology to unleash a cost-efficient system for the Insurance Industries. Here are some of the companies that have harnessed the power of Blockchain technology for pragmatic applications in the Insurance industry.
California based Blockchain pioneer HashCash Consultants claims to alleviate challenges that the Insurance Industry faces on the daily basis. The HC Net Blockchain, a HashCash Consultants venture, uses Smart Contracts that gives a single, consolidated view of policy data and documentation in real time. It delivers automated notifications to network participants following payment events. Multiple companies are allowed to assemble relevant records while streamlining claims recovery policies. It helps to enrich customer experience by enabling insurers to agree on claims and build trust on the basis of relevant evidence. The HC NET Blockchain functions as a vital link across a vast ecosystem of third-party administrators and service provider networks. Lowering operational costs and improving risk handling capabilities, HC NET Blockchain also prove to be of great help for reinsurers.
Founded in 2015 Safeshare Global is the first organization who launched a Blockchain reliant insurance service to tackle the challenges of sharing economy. Having taken the UK based company Vrumi as a collaborator, the SafeShare application helps users to enjoy short term insurance each day, which is further backed by their rental agreement. Filling the gap that is often overlooked by standard residential homeowner’s policies, the coverage provides benefits for short term commercial rentals. A Blockchain framework lets SafeShare provide a time stamp based, immutable database that is significantly low cost than the traditional commercial policies.
Headquartered in London, the digital global registry records the value of diamonds and other luxury collectibles. The company stores data that has been taken from 40 points of data collection in the case of diamonds alone. The data collected is stored in a Blockchain network that uses cryptography to secure and authenticate it. It thus enables users to keep a track of any luxury good that has been registered on the Blockchain network. For the perspective of diamonds, it tracks the stone right from its origin, throughout its life. This method helps to prevent diamond trafficking and unethical mining of diamonds. It also helps to identify fraudulent claims involving the luxury goods which are registered on the network.
Note: The author of this article is Soumanti Datta