Insurance has been around for a long time, about even as early as a thousand years or so.
Blockchain technology is attempted to be used by some Insurance giants
Blockchain technology is attempted to be used by some Insurance giants as well as startups alike in order to avoid problems such as insurance fraud, recording medical tracks digitally and much more. But even though technology has been able to change industries over the period of time and in a lot of domains, but the global insurance companies that are usually multi-trillion dollar industries, they are still stuck in the past.
Need for Blockchain Technology in Insurance Industry
The rise of online brokers has still made people rely on call insurance brokers via their phones in order to buy new policies. Policies, on the other hand, are often processed on the paper contracts that meant that the claims as well as the payments would be prone to error and would often require supervision by humans. Every step in this process shows that there is a potential point of failure in the overall system, and it is possible for the information to end up getting lost, policies could end up getting misinterpreted and the time of settlement could be lengthened which proves the fact that human beings are clumsy and are prone to error hence they are not 100 percent reliable nor are they efficient, hence blockchains might as well be taking advantage of this fact. Here enters the blockchain technology, it is a cryptographically secured form of shared record-keeping.
Even though blockchain technology has remained as the subject to extreme hype, it is a true killer application that is able to be in some of the most ancient fields that are present today. And it possesses the ability to be a transformative force for industries like insurance, which requires cooperation as well as the coordination of multiple intermediaries with different incentives.
Detecting Fraud via Blockchain Technology
In order to combat fraud, blockchain technology is capable of enabling better coordination between insurers.
Insurers could now record permanent transactions, with access to protect the data’s security so that it would not fall into the wrong hands. Claims of storage information on s a shared ledger could help to identify any sort of suspicious behaviour across the entire ecosystem as well as help the insurers to collaborate.
Hence, introducing blockchain technology into the system in order to stop any sort of fraud would take an ample level of coordination among insurers, but it could be hugely proficient in the long run.
Property and Casualty Insurance on Blockchain
Blockchain technology is able to codify rules related to business as well as automate claims processing via smart contracts by permitting the policy holders as well as the insurers to track and manage digitally the physical assets, while simultaneously providing a permanent audit trail.
Smart contracts use blockchain technology and are now able to convert paper contracts into programmable code which ends up helping automate claims processing and easily calculates liabilities in insurance for all the players that are involved.
“Operating around 350 owned container vessels across the world, marine insurance takes up considerable resources for us. Moving it to this platform is helping us automate manual processes and alleviate a range of inefficiencies and frictional costs in the way we have used to trade marine insurance.”
Healthcare using Blockchain Technology
Blockchain technology would be able to return control of medical data back to its patients and allows them to share access to information easier.
Instead of forcing the insurers and provider to work on the data of the patients across different databases, a blockchain system for medical records is able to store information for each record on a distributed ledger in a cryptographic signature. This signature contains the content of each of the documents cryptographically without storing any sensitive information on the blockchain hence making it even more secure.
“Medicine has clumsily entered its digital age via the back door: vast and costly electronic medical records systems have been implemented largely without careful and planned consideration for their impact on the entire healthcare system, including education, practice, workflows, and research.”
It would not be surprising if blockchain replaced insurance companies in the future since it is quite efficient and less prone to error then human beings, but that would also bankrupt insurance companies and further increase unemployment. But it is still too early to judge whether blockchain would ever be able to overcome the legal hurdles in order to become a standard insurance company. But if it does, then the possibilities are endless.