Blockchain has become a hot topic since Bitcoin’s launch in 2009. Now it has transformed from theoretical examples to real-world use. The core benefit behind its use is that it builds trust between two parties without any intermediary or middleman. That’s the reason being the insurance sector is embracing this technology and leveraging its incredible perks.
In 2018, Blockchain usage in the market was valued at USD 64.50 million. By 2023, it will reach USD 1,393.8 million, at a Compound Annual Growth Rate (CAGR) of 84.9%.
Therefore, digital ledger technology will gain great hype in the coming days. But don’t you want to know the benefits of using Blockchain in the insurance sector? If yes, you are on the right page of the search engine.
In this blog, I will explain Blockchain benefits in the insurance sector, its usage, and some popular market case studies. So, let’s read on further and know about the Blockchain revolution in the insurance sector.
1. Blocks False Insurance Claims
Insurance companies usually face fake claims for various reasons, including misstatement, defective information, and misinformation. However, Blockchain will help them resolve the problem by registering all transactions on a shared ledger that both parties can access. Thus, this process will reduce insurance frauds and false filing, respectively.
2. Reduces Administrative Cost through the Automated Verification
Blockchain can automate claims and filing processes and reduce the operational expenses of insurance companies. Because it stores, manages, and share data on a ledger, this technology will help them save time and money spent on manual paperwork. Besides, Blockchain is capable of processing transactions 24/7, allowing insurance providers to function better.
3. Innovating for Digitally Savvy Customers
Nowadays, people are busy with their hectic schedules and don’t have time to go to the physical office of the insurer or brokers to file insurance claims. Blockchain can help insurers innovate and serve you better if you are one of them.
Because Blockchain is a digitized and automated technology, insurance companies can offer customers round-the-clock services with a minimal physical presence. More importantly, the data stored on this technology is secure and immutable, which will help insurers maintain customer relationships.
4. Enables Enhanced Customer Experience
Blockchain makes the overall customer experience smooth and easy. That’s because it offers transparency and shared information of all parties involved during the claim process, like insurers, brokers, and policyholders. Moreover, this technology reduces the processing time of each client’s claim, leading to a pleasant experience.
For example- Sun Life Financial and Accenture have collaborated to create a Blockchain-based platform that helps retirees get access to services that extend beyond the country they currently reside in.
5. Builds Transparency Between Insurance Provider & Holder
Blockchain is an incorruptible technology, so it will help insurers build trust among their clients. This feature can make the entire insurance ecosystem more efficient and reduce administrative costs.
To enhance their client experience, the insurers with the help of Blockchain development companies can create a Blockchain-based platform where policyholders can track claims at every stage. Besides, they can let them share their data with doctors or any healthcare professionals securely without worrying about the privacy of sensitive information.
So, these are some of the benefits of using Blockchain in insurance companies. By implementing this technology, insurers can increase customer experience and reduce operational costs.
Insurance companies can use Blockchain in the following fields:
1. Medical Insurance
To begin with, Blockchain has the potential to track insurance claims quickly and accurately, which will help them process medical claims more efficiently. Moreover, because it creates an immutable record of all transactions on a secure ledger, patients can share their health data securely without involving any third party.
2. Property Insurance
Property insurance is another area where Blockchain can transform the entire process of filing a claim and provide a transparent experience to customers. It can automate all operations, including submitting information for a policy, making payments, and communicating with insurers about claims status. Moreover, this technology will help insurers reduce costs associated with processing paperwork manually over the traditional methods.
3. Title Insurance
As far as title insurance is concerned, Blockchain can provide an immutable record of title deeds so insurance companies can offer their clients an improved customer experience. Besides, it will automate the workflow of insurers by eliminating the need for mediators and manual processing, which leads to better security over the data.
4. Travel Insurance
Travel insurance is another area where Blockchain can generate substantial business by enhancing the customer experience. For instance, it can create a secure and reliable ledger to store all travel records like air ticket purchase details which will help insurers offer quick services in case of cancellations or delays.
Etherisc is a decentralized platform that offers new models for distributing flight delay compensation efficiently using Blockchain technology. Besides, it uses Smart Contracts to create transparent models where the data and funds remain secure and reliable.
B3i is another decentralized platform that helps insurers collaborate to share information and services on Blockchain technology. It opens up new business opportunities, reduces costs, and facilitates faster transactions between all parties involved in the process.
FidentiaX is a Blockchain-powered marketplace where investors can buy and sell insurance policies. Also, it enables policyholders to buy a partial claim or a whole life insurance policy at a fraction of the cost.
Lemonade is an app-based insurer that facilitates instant claims processing by integrating smart contracts on Blockchain technology. It uses one central policy to cover all types of home and personal insurance, so individuals don’t have to buy different packages from different insurers.
Guardtime is a digital platform that allows insurers and other businesses to share their sensitive data and files using Blockchain technology. It helps them reduce costs, improve efficiencies, and speed up transactions between organizations.
Looking at the impact of Blockchain on insurance, the industry will continue to grow as more and more companies implement this technology. Besides, as Blockchain evolves, it will open new opportunities for insurers to automate their systems and offer transparent services to customers.
Here are a few things that you can expect in the coming days:
1. Few insurance companies consider using Blockchain for claims processing to provide a better and more advanced customer experience.
2. The technology will also help insurers build new business models by providing a secure platform for data sharing between all stakeholders involved in an insurance contract.
3. Using this ledger, individuals can purchase travel, health, home, and other types of insurance policies at a cheaper rate.
4. Using Smart Contracts, insurers will offer instant claims processing without intermediaries, thereby speeding up all transactions and boosting business faster.
6. Blockchain will also accelerate sharing of information between insurers, regulators, and other parties involved in the insurance industry.
7. The technology offers more accurate data and better transparency which will enhance the trust of all stakeholders.
8. Blockchain can also help insurers create new products that support under-served markets, improve fraud detection accuracy, etc.
9. Insurance companies using Blockchain will reduce the risk of cyberattacks as hackers can't alter a decentralized ledger very easily.
With the advantages of this technology, insurers can improve their business and streamline operations. Besides, Blockchain also helps customers get cheap insurance policies that provide more accurate data with little paperwork required between all organizations involved in the transaction.
Blockchain will play a vital role in increasing transparency and providing accessible services to individuals worldwide. However, it has a long way to go as it is still in its nascent stage.
In the future, it will become the standard for all types of insurance transactions and reduce costs and efforts associated with manual data verification and processing.