06 Nov 2024
Blockchain technology is bringing us closer to improved productivity, transparency, cost savings, and faster payouts. The technology allows us to share real-time data between unknown parties in a traceable manner. The process is transparent and thus trustworthy. Blockchains can enable new insurance practices and build better products for the market.
Insurance companies have to operate in a comparatively highly competitive environment. Here their retail or corporate customers always expect to get back the best value for the money and also a superior online experience. Blockchain technology presents us with an opportunity for positive change and growth in this industry.
So, in this blog, VeriDoc Sign explores all the benefits of a blockchain solution in the insurance industry.
Does The Insurance Industry Use Blockchain?
There are several organizations that have a large number of stored records. These records need proper information if you want to move and share them. Industries can use blockchain and enjoy the benefits to a great extent, including insurance companies, banks, hospitals, and even governments. But you would have understood that there is not only one blockchain in this world.
There are different blockchains in use globally that you can use, with many types of blockchain initiatives in their development.
Governments or nonprofit organizations use an open or public blockchain. Here information is open to the public and you can access them too.
Closed or private blockchain allows no one other than the invited users to participate, see, access, and use the information. This would interest insurance companies in using and sharing information on insurance policies for administration, billing, and claims payments.
Blockchain and Life Insurance Industry
The blockchain can disrupt the insurance industry in six ways:
Event-triggered smart contracts
Increased back-end efficiency
Higher productivity
Better pricing and risk assessment
New types of insurance
Reaching the underserved
Cost savings is a significant benefit that blockchain can provide. It is logical to see that blockchain can impact claims, administration, underwriting, and product development. Today, many blockchain use cases have focused on cost-reduction efforts. The areas that were initially considered for the insurance industry included the usage of blockchain in building automation and paying claims.
Blockchain automates the claims and functions. It verifies the coverage between companies and reinsurers. When you follow this system, it will automate the process of payments between both parties for claims. Thus, it ensures a lower administrative cost for insurance companies.
If you want to understand another use case of blockchain in different companies, it would be the transmission of digital evidence for underwriting. This includes using electronic health records (EHR) as well.
Digital evidence is often easier to incorporate into underwriting and we can look forward to changes in other areas too. You can now expect more efficiency in pricing and product development. Combining the Internet of Things (IoT) and Artificial Intelligence (AI) will further automate insurance processes that will give a unique identity to our industry.
However, these are still new technologies that require proper due diligence before being fully leveraged by the insurance industry. And the first one to grab these technologies gets an upper hand. Technology is a key to gaining a competitive advantage. And it's time you stop missing out.