The insurance industry is one of the most traditional, bureaucratic, and walled sectors. Now, it is awakening from its slumber and exploring new technology for achieving efficiency. Increased customer distrust in centralized financial services, resulting in high underinsurance rates, is driving its reluctant yet solid interest in innovations. Especially, key players are exploring applications and smart contract solutions with blockchain technology in insurance.
Insurance companies, driven by both curiosity and fear, have started to hire blockchain development companies to assist them with the implementation of blockchain solutions. Curiosity stems from blockchain as it promises to reduce the overall time and transaction costs while increasing operational efficiency. However, insurers also fear this innovation, it can open up new cyber-attack vulnerabilities.
So, now let’s explore how insurance companies can safely adopt blockchain solutions and stop being a laggard in comparison to other sectors of financial services.
Blockchain’s Role in Insurance
Firstly, let’s understand the blockchain technology and its characteristics.
Blockchain technology follows the concept of distributed ledger and, thus, eliminates the need for intermediaries. It stores and distributes copies of the shared ledger at multiple user locations. As a result, it provides access to the same source of data in real-time to any permission insurance company, agent, broker, underwriter, or insured people or organizations. Blockchain uses encryption and consensus mechanisms to register all the transactions on the database blockchain. Also, it publishes all the changes to the records as additions to the original data.
If we talk about its realistic implementation of blockchain solutions in insurance, they may provide the following advantage.
Sharing of medical records between hospitals and insurers (even across borders) with the help of blockchain-powered encryptions and its other feature-rich characteristics. Consequently, it prevents or identifies duplicated and erroneous records, prolonged claim processing, claim denials, and excessive check-ups.
Blockchain Implementation in Insurance
As per a 2019 survey of Accenture Technology Vision, over 80 percent of insurance companies claimed to adopt blockchain technology. It is true that most insurance blockchain projects are lingering at the concept stage. However, some firms have chosen to collaborate and form alliances to accelerate adoption. The likes of such firms include the Blockchain Insurance Industry Initiative (B3i) or the RiskStream Collaborative of the institutes. These trailblazing alliances are developing blockchain-based platforms to adopt the following cases of blockchain use.
Preventing fraud and misconduct
Fraud costs monstrous sums of money to the insurance industry. Mostly, because it is impossible to detect fraudulent activities with traditional methods based on the use of publicly available data and private data sources. As a result, the data collected are typically scattered due to legal restrictions that surround personally identifiable data. Unfortunately, fraudsters are compromising those visibility gaps. For example, for one single care case, multiple claims may be filed.
Once data is stored on a blockchain-based database, cryptographic signatures and granular permission settings are in place to secure it. It means both parties are able to exchange data and check their validity without disclosing confidential information. A distributed ledger enables the collection of historical data and helps businesses detect suspicious trends, like:
- Multiple treatments of the same claim
- Manipulating possession of an insurance policy
- Insurance sold by brokers without a license
- Insurance companies can offer customers encrypted digital ID cards that cannot be faked to achieve even greater security.
However, Blockchain advancements are not limited only to finance.
Blockchain developers have recently come up with a new Blockchain technology that is actively conquering the market and has already become highly popular among many businesses – Smart Contracts.Smart Contracts are a disrupting technology for legal institutions.
It allows businesses to exclude third parties from the creation of agreements and improve their inner paper flows.
In this article, we’ll look into what Smart Contracts are, their benefits, and how companies are already applying this technology for their successful development.Smart Contracts ChallengesThe Externado University Civil Law Department organized a talk to answer questions on smart contracts and the Blockchain.Until now, contracts have been verbal or written documents subject to review by notaries, making them more expensive, just by the fact of having to go to a Notary Office and paying the corresponding document fee.This type of contract is not accessible to all and can be subject to interpretation.
In search of a solution to the problems posed by this model, smart contracts were created.Intelligent or electronic contracts are those exclusively accomplished through any digital medium when it has or can have, a real and direct impact on a specific agreement between two or more parties.The above definition was offered by Dr. Wilson Furtado, an expert in Information Society Law, guest speaker at the talk organized by the Externado de Colombia University Civil Law Department.Smart contracts were proposed over two decades ago by American cryptographer Nick Szabo.
Today, with the blockchain development company of Blockchain technology, the concept is resurfacing and becoming a reality.According to Furtado, the key to these contracts is they can be self-executing and self-enforcing; that is, not requiring an external mechanism, as required on verbal and written contracts.
Blockchain technology serves as the foundation for smart contracts and cryptocurrencies.
These are new age mediums for conducting secure, low cost, reliable, and tamperproof cross-border transactions.Market Research Future experts predict that smart-contracts market may notice a compound annual growth of 23 percent by 2023.Smart contracts control the transfer of digital assets or currencies between buyers and sellers.
The advantage of a smart contract is that it automates the verification of the terms of an agreement and execute transactions.Conventional business agreements require a lawyer and a broker to monitor and complete a transaction.
Lawyers and brokers are the middlemen who oversee agreements including payments, delivery scheduling, invoicing, and meeting terms and conditions.
They usually charge a significant amount to execute contracts.Would you like to explore the benefits of implementing smart contracts to improve your business processes?
We are an India based Blockchain smart contract development company that has a team of blockchain experts who develop solutions using Stellar, Ethereum, NEM and other blockchain technologies.
Get solutions to the question called how to build a Ethereum smart contract based MLM like Lion's share with the Lionshare Clone?Lionshare Clone is an ethereum smart contract based Mlm website's software that runs on the ethereum blockchain & it is totally decentralized smart contract MLM ecosystem like Lionshare.io.
We blockchainappsdeveloper instantly offers you advanced Lionshare script/software to build your MLM business.Connect us @ https://bit.ly/31RwCmN
The increasing importance of Blockchain Applications and Smart Contracts has provided booster rockets for Solidity Language rise to the top of modern business architectures.Business Benefits of using Solidity 1.
Trust and Enhanced data Security4.
Ease of use Programming Language5.
Easy IntegrationSolidity Blockchain DevelopmentBeing the Top Offshore Software & Blockchain Development Service Provider in the industry for over years, we Employcoder use blockchain technology to deliver innovative solutions to Startups, Large and Medium Enterprises.Hire Solidity Developers who have extensive Solidity blockchain development experience in delivering highly efficient and custom Solidity Development Services.
Enrich your business capabilities with our Solidity Experts and Solutions to meet your business challenges.
