The first application of the blockchain technology was on the cryptocurrency space. However, this has changed over the years, and people are now exploring more applications in this space. The insurance industry has not been left behind as it seeks to explore the benefits of this fantastic technology.
Some of the major pain points in this industry include compliance issues, handling vast amounts of data, fraudulent claims activity, limited growth in mature markets, third payment transactions and inefficient exchange of information.
The insurance industry has been in existence for centuries, but the blockchain technology is still in its infancy stages. The following are some of the applications of the blockchain technology on insurance.
If you have ever switched healthcare providers or insurance companies, then you understand they take time to process your data and get you started. Most of the customers also have a fear that they will lose control over their personal data.
The blockchain is providing a solution to both the security and control issues. Customers now have control over their data while the verification process is conducted on the blockchain platform.
Detect and prevent fraud
Insurance companies are very susceptible to fraudulent claims. About 5-10% of the claims that insurance companies receive every year are fraudulent.
The blockchain technology is providing a validation platform that will help insurance companies detect and prevent such occurrences. Different players such as the consumers, manufacturers and the insurers need to come together to make this a reality.
Improve claims processing through smart contracts
Some insurance companies take months or even years before they compensate a client. There are a lot of intermediaries and data is scattered all over which makes processing of claims tiresome and very involving. Smart contracts are the solution to this problem as everything will be automated.
The blockchain will provide some conditions that need to be met before the contract self-executes. The blockchain is transparent and will ensure that the insurer pays only for valid claims.
The good thing with the blockchain network is that it will detect if there are multiple claims submitted for the same occurrence. Human intervention will be very minimal when settling claims which will speed up service delivery process. With smart contracts, all the players will get real-time information from different sources which make processing of claims fast.
The service industry depends on trust. Insurance companies perform a tedious process of verifying their potential customers and what they want to
The blockchain platform provides a solution to this problem as the insurer can verify all the information before a client takes a cover. It is also effortless to detect cases of double insurance whereby some of the customers take more than they are supposed to when an accident occurs.