Blockchain has a huge potential to evolve and its possibilities for future application are more than we have ever assumed. The technology promises us to uproot the traditional system that is the cause of inefficiency and security breaches in industry. The current bottleneck insurer faces in traditional system are the complex legal contract that is difficult to understand and issues faced during claim processing. Considering Blockchain fundamental principle, it seems obvious that the technology works to reduce fraud and maintain the security of valuables. In insurance sector alone, industry spends above $2 million each year on fraud and claims but the use of Blockchain therein can simplify the overall process including areas such as client onboarding, underwriting, and claim processing.
Client onboarding: typically, insurance policy need to collect lots of details such as name, address, birth, health and economic status to complete KYC, but with the human interventions involved it can be a slow process. Blockchain technology working on a distributed network makes data available to anyone on the network while securing it with cryptography and preventing any data alteration.
Underwriting: underwriting in the insurance industry is a costly and long process which includes evaluating the risk involved in furnishing client with a policy, calculating the coverage they receive and the total premium they need to pay. With Blockchain technology, external data are included to reduce the risk involved and help to automate and shorten the entire process reducing cost.
Claim processing: people buy insurance to ensure your family wellbeing if something went wrong, But when the time comes, claim processing seem as big headache. Even in insurer’s perspective, the industry is facing serious thread with tough regulation to avoid frauds. However, Blockchain powered with smart contract allows insurers as well as the consumer to manage claim in a transparent, responsive and irrefutable manner. Meanwhile, its distributed model also gives access to insurers to the desired authentic information, reducing administrative involvement during claims processing.
It is the just early stage of Blockchain to grow and integrate to reach its true potential. The technology relying on a decentralized model, with a capability to eliminate the majority of human intervention significantly carries out insurance based process relatively at high speed, and security. With this, we expect a major shift in individual buying insurance from large institutions to the community-based insurance group.