The application of blockchain across the various sectors of the industries is much-talked matter since the inception of blockchain; insurance also falls well within the periphery of such a discussion. Though some critics argue the fact that blockchain only makes a marginal difference and the technology is mere hype, but on the other hand, supporters cite the innumerable benefits that the blockchain technology has brought in that has already disrupted some of the existing systems. In this article, we shall discuss how blockchain can bring in revolutionary changes in the Insurance sector.
Benefits of Blockchain in insurance
Some of the benefits of blockchain in the Insurance sector are discussed hereunder.
Transparency
As per the existing insurance policies, the policyholders do not have access to their data stored in the databases of the insurance companies and they are paid whatever the insurance companies decide to pay. Moreover, if their (policyholders’) information is shared with the third parties, they are not even notified about that. This is high time that these policies should be changed, and more transparent policies should be brought in. The decentralized and open nature of blockchain technology eliminates these loopholes and the customers can have access to their data and will be notified about every single operation done.
Instant Payouts
Under the existing insurance policies, the customers sometimes need to wait for days to even weeks for the payouts to reflect in their accounts. Using blockchain-enabled fiat currencies and tokens, these issues can be solved almost instantly. Payouts can be made immediately and can even be reused for buying additional coverage.
How Blockchain will give power to insurance?
Blocking False Claims
The most significant issue that the Insurance Industry is facing right now is fraudulent claims. Though there are smart analytical techniques to identify false claims, there always remain some loopholes and more sophisticated technologies that the hackers utilize to dupe the insurance companies. The use of DLT (distributed ledger technology) will help in reducing fraud. The inherent feature of the blockchain technology to capture time-stamped transactions with audit trials will make it difficult for the fraudsters to dupe any transactions and create false claims.
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