How blockchain technology will transform the insurance industry

I discussed how the blockchain would transform the insurance sector in the first part of this series, focusing on how it might reduce fraud. Today, I look at some of the additional elements of this move that will significantly alter how the market is structured.

Transparency and trust

Customers of insurance have limited possibility of understanding how their data is handled. The security of private customer data has become more ambiguous as a result of service digitization. Customers who have lengthy claim processing periods or who have their claims denied for reasons that were not made explicit in the initial contract tend to become more and more dissatisfied in this market climate characterised by mutual mistrust.

The decentralised ledger can offer a lot of benefits to the degree that insurers decide to utilise it. Customers have control over what information is available about them and how it will be handled. In a network where data is unchangeable, removing duplicate records and verifying their authenticity can help with the creation of more detailed profiles.

This kind of technology can also be used in conjunction with AI and machine learning to automate the processing of claims, speed up payments, and boost consumer confidence and satisfaction.
Additionally, using personal devices, it is possible to automatically verify payments or claims made by third parties. To put it another way, a consumer can instantly be informed about the legitimacy of a contract he has signed with a broker, a control mechanism to help him determine whether or not he is dealing with a dishonest party.

Management optimization

This brings us to a third area that is directly impacted by market adoption of blockchain technology. In addition to requiring a lot of paperwork and effort from the insurance companies, the sale of insurance plans is a difficult procedure that frequently leads to client complaints of fraud.

Unregistered vendors frequently negotiate nonexistent contracts, which harms the reputation of the insurers. Additionally, vendors frequently end up drafting the same contract for many parties, which may be very problematic for everyone when claims are made.

On the other hand, the approval of claims and their payment are typically both done quite slowly. Blockchain technology has the potential to disrupt each of these elements. It may make it possible to automate the claims, claims, and payment management processes, lowering associated costs and improving the accessibility of premiums.

Here, smart contracts seem to be a fantastic replacement for conventional documentation. Customers, insurers, and vendors can all instantly learn about the legitimacy of a policy or an attempted scam using duplication when combined with connected devices. It is also conceivable to think of the system as being networked, with automatic claim triggering being directly linked to, say, anti-theft sensors in automobiles.