Wondering can Blockchain Technology help in revamping the insurance industry? What are its use-cases? Well, we have got you covered. This article talks about the flaws associated with the current insurance industry, explaining the role of Blockchain.
So let’s get started.
Table of Contents
- Flaws with the Current Insurance Industry
- Role of Blockchain in Insurance
- Concluding Lines
Flaws with the Current Insurance Industry
The insurance sector involves several players operating in diverse areas. The industry relies on a basic concept, and that is that the insurer guarantees payment for an uncertain future, whereas, in exchange, the policyholder pays an adequate amount to the insurer for that protection on that uncertain future.
But such industries face several challenges. This is because insurance sectors deal with complex agreement issues, face limited growth in developed markets, fraudulent claims activity, third-party transactions, and handling tremendous data. Additionally, the movement to digital transactions has left many insurers questioning how to streamline sensitive information.
Blockchain, with its ability to offer trust, transparency, and immutability, provides a single source of the truth that is updated in real-time, which allows the participating parties to maintain the comprehensive asset and data ownership records without relying on intermediaries.
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Role of Blockchain in Insurance
Unlike a traditional centralized database, Blockchain is a peer-to-peer, decentralized technology whose records are distributed and maintained on several computers, and users can have complete access to individual blocks using unique keys. And if an unauthorized user tries to access a block of information, the system rejects the effort and, in fact, leaves proof of tampering.
The insurance sector operates in a highly competitive manner where customers expect the best value for their money and an excellent online experience.
Let’s explore some of the ways in which technology can help the insurance industry for good.
With its decentralized and immutable digital repository, Blockchain can help in verifying the authenticity of customers, policies, and transactions by maintaining all the past records.
Blockchain is known for maintaining speed, accuracy, and transparency; therefore, it helps in creating positive customer experiences.
Distributed ledger technology can shorten the lengthy claims cycle by offering increased efficiency, leading to higher customer satisfaction.
Unlike traditional processes that are full of inefficiencies, slower and costly, Blockchain offers faster and better access to data that leads to smoother interaction between insurers and their customers.
Technology provides digital smart contracts to capture obligations and terms, binding the insurer and insuree. With Ethereum’s smart contracts and Blockchain-based applications, also known as dApps or decentralized applications, insurance can be conducted over blockchain accounts, leading to automation and tamper-proof audit trails.
Moreover, Blockchain can manage, share, and monetize massive amounts of data without involving any third-party intermediaries. The technology can store static records by creating a digital fingerprint, which provides both security and transparency without any central authority. Streamlined data can also make risk assessment timelier and more accurate.
When it comes to security, Blockchain helps eliminate suspicious and duplicate transactions.
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While Blockchain might not be a one-stop solution to problems faced by insurance industries, it does provide foundational technology that fosters trust, transparency, and security, which is missing otherwise. Providing a single source of truth allows friction in business processes, and data reconciliation is made more flexible, and time spent in revealing information is discarded, allowing for improved accuracy and cost reductions while maintaining transparency.
To conclude, we can say that technology will not only help in enhancing the industry’s existing processes but will also enable new practices. In the years to come, Blockchain might be one of the foundational technologies for various industries.
If you want to learn more about how Blockchain works, how it can be implemented, and what its use-cases are, we are here to assist you.
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