Insurance Industry: The Blockchain Revolution!

Mar 9, 2022

The traditional insurance business model has proven remarkably resilient over the years. On the other hand, traditional insurance is starting to feel the digital impact as new technologies alter how customers interact with businesses and how products and services are delivered. Blockchain Revolution is one of the latest boosts to these technologies. Due to various companies’ implementation strategies, Blockchain, due to distributed ledger technology, has begun to push the boundaries of the insurance experience. Current Scenario of the Insurance Sector

Although the insurance industry has been around for centuries, many processes are now obsolete. Many policies are still processed on paper contracts, and consumers buy new policies over the phone. While these processes are effective, the risk of human error and misuse can result in information being lost, tampered with, or misinterpreted. According to a report by the Coalition Against Insurance Fraud, fraud accounts for 10% of all property and casualty insurance losses, resulting in at least $80 billion in annual losses to American consumers. Anthem Insurance revealed a data breach in 2015, exposing the personal information of 78.8 million customers. Aside from the incalculable losses caused by identity fraud, the entire industry was hit for $375 million. As a result, there’s a lot to be desired in terms of security, efficiency, and customer satisfaction, all of which can be helped by integrating Blockchain in the insurance sector.

Blockchain and Smart Contract solutions have the potential to completely automate insurance markets, locking and unlocking funds as prescribed conditions are met, dynamically pricing risk, and allowing new markets to emerge. As new peer-to-peer insurance markets powered by Blockchains emerge, disintermediation may occur. However, how can Blockchain in the insurance sector be used to solve these issues in the long run? Advantages of Integrating Blockchain in the Insurance Sector

Because of the Blockchain revolution, transactions are completely free to use and have the potential to revolutionize the way insurance is purchased. Using Distributed ledger technology and a fortified cybersecurity protocol, Blockchain improves efficiency, security, and transparency for the entire insurance industry. Although Blockchain in the insurance sector is still in its early stages, many industries are already using it. Blockchain technology integration in the insurance industry is made feasible by smart contracts. A smart contract is a digitally signed, computable contract between two or more parties”. At least most of the terms of such agreements can be executed and enforced by a virtual third party and/or a software agent.

The smart contract makes it possible to securely share and execute information. Consider this as an “If/Then” programme: if an insured car is involved in an accident, the insurance company will pay the claim. Because the information is secure and automated, the use of a smart contract in Blockchain allows this type of payment contract to be completed without human interaction. We can start to see how this powerful technology can help large organizations with contract automation.

One of the most visible advantages that Blockchain in the insurance sector can provide is cost savings. It’s easy to see how Blockchain could affect claims, administration, underwriting, and product development, and many of the current blockchain use cases are focused on cost reduction. The use of Blockchain to automate the payment of claims is one of the first areas that insurance companies are considering. By

verifying coverage between companies and reinsurers, Blockchain has the potential to help automate claims functions. It will also automate payments between parties for claims, lowering insurance companies’ administrative costs. According to Gartner, by 2030, Blockchain will have generated $3.1 trillion in new business value. Use Cases of Blockchain Integration in the Insurance Sector

  • Insurance for the sharing economy: When offered through Blockchain technology, dynamic insurance can help with real-time usage-based insurance while keeping track of the entire transaction history. It will aid in the reduction of operational costs and the preservation of transaction history.
  • Claim Subrogation: While current subrogation is largely manual, insurers can make use of smart contracts for automating the processes of claim notification, loss investigation, and recoveries from other insurers and reinsurers. Reducing the number of interactions between various parties, particularly call centres.
  • Settlement of claims Automatically: The call centre, smartphone app, or connected car sends an accident loss notification to the Blockchain, which activates the smart contract. When all of the policy conditions coded into the smart contract are met, the information is sent to the nearest workshop to prepare for part replacement, the insurer is notified, and payment is initiated.
  • Reinsurance in Insurance: Because the Blockchain provides an immutable record of claims and a time-stamp when they are made, it reassures reinsurers that the information provided existed then.
  • Group life insurance: It is a type of policy in which the employer is the policy owner, and the employee is the beneficiary. The process is currently labour-intensive, but it can be quickly automated in real-time by integrating the tri-party system via Blockchain Smart Contract execution.
  • Risk mitigation: The Distributed ledger technology helps mitigate risk by transferring insurance claims to an immutable ledger. This eliminates sources of fraud in the insurance industry.

MSRvantage’s capabilities in Blockchain:

In the insurance industry, MSRvantage blockchain digitizes assets. It optimizes business processes by deploying solutions that add value to businesses by lowering costs, reducing transaction duplication, and providing reconciliation and authentication for commercial and regulatory reasons. We specialize in services that help identify & mitigate fraudulent claims; our payment options are flexible. MSRvantage helps in the reduction of cost pressures as well as eliminating human errors.

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