Written by CFTE’s Experts
Blockchain, unlike traditional database systems, is a decentralized system where records are distributed and saved in multiple systems at multiple locations. This gives a unique and dynamic functionality that is proving to be quite beneficial for the insurance industry. As we shall see shortly, the insurance business is taking a new shape thanks to Blockchain.
Thanks to Blockchain, the productivity of Insurance companies is getting even better than ever. Let’s look into a few examples of that, discussed below:
Decentralisation enabled by blockchain has increased the transparency for both the customers, carriers, and insurers. Basically, the distributed database system is no one’s exclusive property, so any kind of illegal tampering or fraudulent activity becomes close to impossible. This transparency is boosting the overall confidence of customers too.
Initially, the chances of mistakes or messing up some of the basic things were quite common due to the ever-growing complexity. However, blockchain enabled a system that is giving insurers more air to breathe and understand the systems. As a result, the chances of mistakes have decreased considerably.
Blockchain has given the opportunity to integrate more APIs and make the structure of the insurance industry more dynamic and organized. This, when added together, is opening bigger doors for innovation. At this point, we cannot guess how far the innovation will go, but it is surely going to be revolutionary,
This distributed database runs on Peer-to-peer technology, which is quite scalable. Its scalability makes it a very fast database, which allows for information to be fetched accurately quickly.
Here are some important applications of Blockchain in the insurance industry:
– Blockchain is being used to boost all the cybersecurity protocols of insurance companies.
– Blockchain is being used to streamline insurance claims and retrieve accurate data to cross-check the validity of these claims for potential fraud.
– With Blockchain, the need for mediators in the process is being removed, increasing customer confidence and lower the chances of middleman tampering.
Since we’ve discussed the applications, it would be worth looking into a couple of success stories of insurance companies that implemented blockchain:
FidentiaX: They have developed a blockchain-powered digital software called ISLEY. This software gives customers a detailed overview of all the insurance policies and other important notifications that they may find beneficial.
Lemonade: Blockchain is used in Lemonade to develop smart contracts. These contracts immediately verify any claim that is made, and that quick verification is used to pay the customer on a timely basis.
As of now, the technology of Blockchain is quite expensive, therefore, not every insurance company can afford it. But its price will certainly come down with time, as this technology gets more mainstream in the market. Until then, or even after, we can expect a lot of promising developments in Blockchain.
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