Blockchain technology has the potential to interrupt the insurance industry. It will also change the way insurance companies prevent fraud, share data, and process claims. While the insurance industry is still exploring and implementing blockchain technology, it is close to adopting it. It is the time for insurers to work with industry experts, regulators, and startups to find ways to navigate challenges posed by blockchain technology. Insurers are looking for new ways to leverage blockchain for insurance as the technology matures. Below are the most likely impacts of blockchain technology on the insurance sector.
The process of data-entry and acquisition of a health cover was inefficient in the past. In fact, customers would fear losing control over their critical health records. However, blockchain technology provides a solution to increase data security and drive efficiency. Blockchain technology allows individuals to have control over their data. In fact, enterprises can use blockchain solutions for data verification and sharing of information without the need to re-enter the data.
Improved Fraud Detection
One of the reasons insurers should invest in blockchain technology is its potential to improve fraud detection and prevention. Research has shown that about 5 to 10 percent of insurance claims are fraudulent. As such, the insurance industry might be losing close to $40 billion annually. Insurance companies can now use blockchain technology to verify policies, transactions, and clients for authenticity. However, there is a need for extensive cooperation between all parties that use blockchain technology to check police reports, purchase insurance products, and share information to prove policies. That will help utilize it to the fullest potential. Insurers can use blockchain technology to detect fraudulent claims and counterfeit goods.
Speed Up Claim Processing
Smart contracts and blockchain can help solve many issues experienced by both the insurer and the insured. Insurance companies are battling increasing cases of fraud while the insured finds contracts long and ambiguous. However, blockchain can benefit both parties by helping manage claims transparently and responsively. For example, the use of blockchain to record and verify contracts speed up claims processing. Blockchain technology ensures the insurer pays only valid claims. In fact, insurance companies can use this technology to know the claims that were submitted for the same event. Blockchain triggers payment of the policy only after the insured individual meets the criteria. That helps speed up resolution for claims as no human intervention is needed.
While blockchain technology is still in its infancy, it could disrupt the insurance industry significantly. Its adoption will have a significant impact and cause a massive change in the insurance sector. Every insurance company needs to take advantage of blockchain technology. It will impact the way insurance companies operate and detect fraud. While it is still unclear how blockchain technology will impact the insurance landscape, experts expect it to disrupt the industry. Interestingly, blockchain technology is self-managed and doesn’t require the intervention of a human being. It has widespread implications that will disrupt insurance companies as well as other industries.