Blockchain and Its Applications in the Insurance Industry

Posted on August 17, 2021

Blockchain technologies are the new tech darlings, and they’re here to stay. Blockchain development within the insurance industry has several different methods and applications. Each of the tools and applications occurs in day-to-day operations.

Blockchain in insurance is changing the game. Blockchain in insurance allows you to process claims instantly. Insurance companies do not need manual overhead when utilizing blockchain in insurance.

Keep reading and find out why blockchain technology is so beneficial to the insurance industry. You'll also understand how blockchain in insurance works.

What Is Blockchain and How Does It Work?

Blockchain technology is a highly intricate system of recording information
in a near impossible way to change, cheat or hack the system. Simply put, it's a digital
ledger of entries or transactions that are duplicated multiple times across every single
computer on the blockchain system. The three step series begins with a person
requesting a transaction. Once the request is complete, it is broadcast to a P2P network
assisted by nodes. Those nodes then validate the transaction and the persons status
with the help of algorithms.

Blockchain in Insurance Claim Accuracy

In the insurance world, it's not unusual for a claim to process incorrectly. Using blockchain insurance also helps increase claim accuracy. Blockchain in insurance is growing every day. 

Blockchain is helping to increase claim accuracy while reducing the cost of a claims journey up to 30%. That means insurance companies can pay out accurate claims on time with no delays. 

The Perks Of Blockchain In Insurance

Best of all, blockchain speeds up the claims processes. It is automation through blockchain that is one of the many advantages you can receive with blockchain. You also have the option to build product and service policies on top of the blockchain.

This technology is perfect for creating modular insurance claims procedures within your organization. By launching effective blockchain projects, companies are starting to use smart contracts. New Canadian insurance start-ups and older companies have re-configured themselves for blockchain use.

The companies are ready because they have read the future and know it's coming with or without them. The advantages make it too beneficial not to try.

Blockchain's True Potential

There are many Canadian insurance companies that are testing out blockchain technologies. So naturally, they want to use the technology that awaits them as well as the advantages to be had. That's when most insurance companies realize blockchain's true potential.

With claims processing, a major benefit of blockchain technology is that it provides an immutable audit trail. 

Blockchain Disadvantages

The possibilities seem unlimited when you begin to use blockchain technology. The insurance industry has been the same way for so long it's hard to fathom how blockchain solutions help. The first advantage to recognize is blockchain is not a solution for every problem.

In fact, using blockchain for everything may be detrimental to your company. Blockchain is challenging to use with insurance scalability issues. It also doesn't transfer perfectly to standardizing insurance benefits.

Blockchain also can be helpful with identity management and supply chain management. Another use would be providing security for confidential information. This helps provide safety against hackers.

More Ways That Blockchain Can Improve the Insurance Industry

The first advantage is that they're transparent and tamper-free. Second, the claims process speeds up, and finally, it reduces the risk of fraud. Here's how it works when you use a smart contract for insurance.

A policyholder’s information is bound to confidentiality. This is true for any insurance's standard operating procedures and policies. After a specific event takes place, the smart contract will approve the claim.

The smart contract does this by using a secure blockchain. You can even apply insurance broker or carrier commission using blockchain.  

Smart Contracts and their Uses

Smart contracts use agreements with codes. The codes trigger when certain conditions occur. This is true for insurance companies or most any business entity.

The conditions can be in the form of payment or delivery. It can be in the form of specific criteria. In most cases, smart contracts for insurance have three distinct advantages.  

Blockchains Distinct Advantages

The first advantage is that they're transparent and tamper-free. Second, the claims process speeds up, and finally, it reduces the risk of fraud. When you use a smart contract for insurance, you know the policyholder’s information is confidential.

This is also true for any insurance's standard operating procedures and policies. After a specific event takes place, the smart contract will approve the claim. Using smart contracts does this by blockchain.

You can even apply insurance broker or carrier commission using blockchain.  

Blockchain Technology Disruptor 

Blockchain technology is the next big game-changer for the insurance industry. It is a disruption for good in most cases. Offering accurate claims processing and instant approval is a welcome sight for customers.

To send and receive digital currency payments in real-time is a game-changer. This allows customers to receive and use their funds without a long waiting time. It also helps end the chargebacks and fraud that exists today.

Some industries use blockchain technology to issue sell and exchange digital currencies. Every industry can find a way to leverage blockchain technology. This is very true in the insurance industry.

To Summarize

It's time to take advantage of blockchain in insurance. Once you do, you will have access to many different additional benefits, which include but are not limited to.

  • Anchoring the insurance claims process which helps ensure coverage for all customers
  • By using blockchain technology, you become an insurance industry leader.
  • By using a blockchain-enabled platform for clients, you provide instant coverage reports.
  • You can send and receive digital currency payments in real-time which is a major game-changer.

The benefits list for blockchain technology in the insurance industry has many advantages. 

Blockchain technology will play a big part in the future for all industries. But especially for insurance customers and companies. Now's the time to learn more about blockchain in insurance.

When you are seeking comparison rates or how much money you can save, reach out to Insurdinary. Every insurance company and customer has the same financial goal. The financial objective is to save money while receiving the best benefits possible.

If you want insurance products that answer your needs, you've come to the right place by reaching out to Insurdinary today!

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