Blockchain technology is far more efficient than the ledger technology that is used to power bitcoin. The technology enables businesses in the insurance sector to improve trust, promote security in executing various processes, and reduce the overall transaction costs. It's predicted that the blockchain technology has the potential to transform businesses that have been resistant to change such as the insurance companies. Insurance companies that have already embraced the technology to transform their businesses into " insurtech" companies have started launching new products to meet the evolving new market dynamics.
The power of possible
Blockchain technology has the capability of transforming financial services in dramatic ways. Insurers can now attract new business opportunities through higher-quality service delivery and boost their day-to-day operations. The companies can underpin the global economy effectively by using the technology. Just as the technology has been utilized to increase efficiency in other areas such as public service delivery and identification of refugees, it can also have a positive impact in the wholesale insurance sector by enabling players in this industry discharge their responsibilities in a more accountable way.
The PwC UK blockchain lab has demonstrated proof of how the technology has improved insurance business efficiency, reduced time and errors, minimized reputational risks, and enhanced instant access and legal certainty. The blockchain proof of concept also concluded that 56% of these businesses appreciated the significance of blockchain technology while 57% conceded that they didn't have the right insights on how to capitalize on blockchain technology to better their businesses operations.
Curbing insurance fraud
Insurance companies across the globe lose over $80B USD to fraudsters annually. It's easier for fraudsters to manipulate sensitive information derived from claim information such as ownership and item authenticity that is used physically by adjusters for verification of validity. But with the blockchain technology's provenance capability, the insurance companies can generate authoritative digital records and items, business insurance quotes, policies, and claims, making it impossible for thieves to defraud systems. In other words, the encrypted technology enables the insurance companies to use the unique digital records in tracking real-world items of value throughout their entire life and avoid data point failures. Everledger is an example of a UK-based company that has embraced the IBM blockchain technology in registering digital records of millions of items of value such as diamond and wine.
Real-time insurance for sharing economy
Leveraging personal possessions or assets for the commercial economy is one of the major concepts behind the sharing economy being exemplified by various companies like Uber. However, these companies have been experiencing various challenges on the insurance products designed for businesses and investors in this dynamic economy. SafeShare Global is an example of the companies that have adopted blockchain technology to streamline the short-term insurance contracts for the sharing economy. The company doesn't have to use expensive centralized systems to provide time-stamped and on-demand digital records of insurance that are secure. SafeShare has opened up a new market by eliminating the cost of disruption.
Facilitating the use of smart contracts
Etherium blockchain pioneered the use of immutable " smart contracts" that are programmable logic that can self-execute predetermined conditions without using other interventions from third-party sources. Therefore, the insurance claims can be automated and thus reduce costs significantly. Etherisc is one of the companies that have embraced the development of this blockchain technology's potential.
Much as blockchain technology is doing well on the radar screens of insurance companies and financial services businesses, other businesses in other sectors have started to get grips of what the blockchain technology can do. Countless innovative minds have been invested in the blockchain technology that is at its familiarization stage in the insurance sectors.