Blockchain tech has clearly impacted a lot more industries than just the cryptoassets. This is especially true for the insurance industry, where it has a lot of potential. The tech has matured to a great extent in the current times, and it is clear that the adoption of blockchain helps in bringing about major changes. Here are some ways in which blockchain can transform the insurance sector.
As a public ledger, blockchain helps in eliminating errors and detecting fraudulent activity. Decentralised digital records not only help maintain the authenticity of records but also helps in keeping relevant medical history details on file. This in turn will allow the insurer to be able identify any suspicious activities and weed them out from the start.
Claims prevention and management:
A transparent and customer-focused claims model is possible using this technology. Customers can easily access their details and update them with new and relevant personal information. This helps in reducing chances of loss of details by human error. Blockchain helps improve communication and coordination between the customer and insurance agents. It acts as a network connecting multiple people and ordering data from several devices.
IoT and product management
With the number of devices and objects connected to the Internet of Things (IoT), there is a sudden influx of information and data collected. This will be much more valuable to the insurers as this enables them to develop a more accurate and effective actuarial model. The process of validating information will become easy and consumers will have control over their premiums.
Payment and new distribution models
Global insurers have developed and explored new payment models by experimenting with a single global ledger. With a single ledger there is a chance for increased automation which can help in managing the risks efficiently. Streamlining payments and identifying new opportunities for insurance products also becomes possible. In the long-run this is a cost effective model that can help manage currency fluctuations easily.
One role that blockchain plays in insurance is that it makes the overall visibility of reinsurance contracts and risk exposures more clear. The ledger provides a chance to gain insights and sends notifications about possible reinsurers to offload a portion to their subsidiaries. This is an excellent way to rebalance overall capital exposure for those providing reinsurance.
It is crucial to note that the blockchain clearly has a lot of impact on the insurance industry. It has enabled innovation and brought about disruptive changes to the business model. Here are a few things that it can bring about:
- Better management of the claims in a more verified and effective manner.
- Reducing the possibility of fraud.
- Improved quality of data for underwriting.
- Improved overall efficiency in the overall insurance sector and value chain.