How can blockchain change the insurance world?
Seeing the word blockchain may be daunting for some people, due to the notion that it is a complex process with a concept hard to understand. Though that may be true, the basics of it can be simplified.
Blockchain is basically a shared ledger filled with “blocks” that contain information of transactions, that are then linked to other blocks, thus forming a “chain”. For example, when an individual makes an online purchase using cryptocurrency, the date, time, and value of the transaction will then be stored in a block. Blocks also store information of the parties involved in the transaction, therefore when your transaction is made your block will be given a unique code. The unique id is also stored in the block, so for example, if you buy the same product again from the same website it will still be stored in a new block due to its unique ID.
How does this relate to the insurance world? Find out in this Pacific Prime article which will lay out the ways blockchain will affect both insurance companies and policyholders.
How will blockchain affect insurance companies?
Due to blockchain technology, insurance companies will be able to fix a lot of problems in the insurance world today. Firstly, insurers will be able to track claims like never before due to it all being in a shared ledger. For example, a car insurance company will be able to track the driving behavior of an individual and from there adjust their policies towards the individual. If the driver is reckless, he/she may find it harder to attain certain premiums.
Fraudulent claims and quicker processes
The new technology will also allow insurers to identify fraudulent claims, this will again be possible through information being shared on a ledger. Reinsurers, insurers, and brokers will have their data stored in blockchain, which will allow processes like underwriting to be reduced from months to real-time.
Additional to that, risk assessment also becomes easier and can be performed often. For example, in the health insurance field, insurers will be able to track an individual’s data from verified sources, thus allowing them to perform risk assessments and changes in pricing accordingly. The health insurance business requires insurers to have a vast amount of knowledge on policyholders, so blockchain will help store that information, thus making it simpler to access.
How will blockchain affect policyholders?
Real-time policy adaptations
Policyholders will be able to experience policy claims like never before. For example, if someone is waiting for their goods to be shipped, but the cargo is somehow damaged, that individual could get their claim instantly.
This concept also comes into play in the health insurance realm. For instance, someone living a healthy lifestyle could see premiums becoming cheaper for them, or benefits added to their premiums. With the technology of blockchain, policyholders won’t have to wait months for the underwriting to come through and for the process to be completed.
Companies in the car insurance business will also see a rapid change which will, in turn, affect policyholders as well. Insurers will be able to track the hours the car is driven, thus allowing for policies like pay-as-you-drive. On top of this, drivers with a good driving record, could get cheaper premiums in the future or other benefits.
Below are quotes from leaders in the blockchain and insurance world, regarding the incorporation of blockchain in insurance.
Dr. Mervyn Maistry, CEO of Konfidio
“The most important 2019 event every insurance actor is looking forward to is the release of B3i’s risk transfer solution. The multinational consortium is working with Corda to develop a smart contract layer allowing insurers and reinsurers to exchange risks in a more efficient and frictionless fashion. The expectations for this project are high, especially as it involves 15 of the most important insurance actors.”
Satadru Sengupta, CEO of Halos Insurance
“Faster processing thanks to blockchain based authentication is a trend to watch.”
James Song, VP of Shadow Industry
“Machine learning is changing how we understand data, and using machine learning with blockchain will improve pricing and reduce fraud. For instance, it’s possible to dynamically price insurance based on the time of year or weather patterns. These are things we could never do before the advent of cheap computing power, which drives machine learning.”
Visit Pacific Prime to learn more
Blockchain technology has already been in several businesses for a while now, but its introduction to the insurance business will provide major changes. It will be helpful and efficient, but like other technologies, it may take some time to get used to it. Visit Pacific Prime’s website to read more informative articles like this one, as well as have a better idea of the major trends in the insurance world. While there, you can also get some free expert advice and a free quote to go with it.
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