Bitcoin has been the most intriguing digital (crypto) currencies so far. It caught people’s imagination when it registered a growth of more than 400% per year (compounded annual growth rate). For a moment people analysing the currency, and the political trend started speculating Bitcoin as a future medium of financial transaction.
However, the hidden gem has been the technology behind the Bitcoin or any other cryptocurrency. Safety, speed and fraud prevention has been the headache of most legitimate governments and financial institutions across the world.
The security, speed and impossibility of fraud offered by the blockchain technology has governments, central banks, insurance companies and even stock exchanges taking an additional interest in it.
Conjugation of Blockchain and Bitcoin in the Insurance Industry:
While the blockchain has been liable to outrageous publicity, it has the capacity to be a transformative power for businesses like insurance, which requires the coordination and collaboration of a wide range of middle people with various impetuses.
It’s too soon to tell whether blockchain can defeat the legitimate and administrative obstacles to end up a default standard in the insurance business. Yet, the conceivable outcomes are unfathomable, and insurance agencies and new businesses alike are investigating protection applications for the blockchain full-throttle.
However, we do know that Bitcoin can strengthen the trust between the insurers and their customers, courtesy, the secure financial transaction provided by the blockchain technology. Insurance companies can utilise this technology to create a distributed ledger, thereby providing transparency and transaction history along with claims tracking.
How Blockchain Can Be Effective in Insurance Industry: An Illustration
A customer named Sudhir Pandey seeks to buy an online term insurance plan from ‘Company A’. However, based on his medical reports, company A rejects his application. Therefore, Mr Pandey contacts ‘Company B’ for the same. Now, if both the companies are using blockchain technology, then Company B can access all the medical reports of Mr Pandey which were conducted by Company A. In this way blockchain technology can be highly effective in speeding up the process.
Benefits of Blockchain In Insurance Industry:
- Offering Transparency
Blockchain technology can generate new data streams which will provide necessary and relevant information to create trust. Moreover, it will automatically alert the insurers if an accident occurs or in case of other services like health, rescue etc
- Detecting Fraud Cases
The usage of blockchain network will help to verify the authenticity of claims, as it will provide data history to help insurers detect any frauds.
- Improving Data Quality
Blockchain network will additionally help to prevent errors in the system, thereby, fulfilling the gap between the end users and insurers.
Benefits of Blockchain Technology for Policyholders:
- Speeding Claims Processing
Blockchain technology can expedite claims processing. After the insurers verify the claim, it will get recorded on blockchain and help in correct contract execution. Moreover, it will streamline the operations and significantly reduce the time of settlement.
- Instant Fund Disbursement
With the implementation of blockchain technology, there will be direct interaction and transparency during the claim process, especially life insurance claims. Therefore, upon completion of the process, insurers can transfer the claim proceeds of life insurance plans like online term insurance directly into the digital wallet.
Furthermore, blockchain innovation can empower better coordination between safety net providers to battle misrepresentation. Putting away claims data on a common record would enable safety net providers to team up and distinguish suspicious conduct over the environment.
With the adoption of blockchain in insurance, there will be a long-term implication, especially after adhering to regulatory requirements. However, for the insurance companies, it is important to understand the process of blockchain technology before implementation.