The insurance industry is at a stage where it is experiencing significant amounts of change. Thanks to the changes in customer expectations and lifestyles, along with the considerable growth of technology, taking innovation to a whole new level.
Insurance companies now have to think of revolutionary technologies, such as the Internet of Things (IoT) and blockchains, which have the potential to bring about positive changes. For example, AXA, a European insurance company reimburses its customers, even if they haven’t filled out claims forms due to delays in flights. They have been able to achieve the unthinkable, due to blockchain technology.
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If you think about it, this is the perfect time for the insurance industry to start working with experts, regulators, and start-ups. The collaboration between various entities and insurance companies will allow them to overcome the challenges of blockchain implementation.
To show you what the insurance industry stands to gain from implementing blockchain technology, here are five advantages:
One of the biggest advantages that the insurance industry will witness is an increase of trust from their customers. At present, people are wary of getting insurance, even though it is extremely important and makes things such as health care, protection against environmental dangers affordable. By paying a small amount regularly, customers can claim insurance when the time arises.
As most of the people don’t trust insurance companies, they don’t have any safety nets in place to protect them in dire situations. Blockchain technology will make it easier for customers as the whole process becomes transparent. Customers will have better access to data and various procedures followed by insurance companies. As a result of this, they will have better trust in insurance companies.
The insurance industry faces a lot of problems when it comes to processing claims. From the customers perspective, the contracts they sign look confusing and long. Whereas from the side of the insurance companies, they have to ensure that the claims made by the customers are valid.
The problem of claiming payment has haunted the insurance industry for years, as they haven’t come up with fool-proof procedures to make it safe for all parties involved. However, with the implementation of smart contracts and blockchain technology, the parties can handle claims transparently. The first step would be to verify and record all the contracts that exist within the blockchain. When a customer submits a claim, the blockchain will only release funds, if it is valid. For the claim to be valid, it must meet the requirements set by both parties, without needing the intervention of a third party.
Enhances experience for customers
Customers who have insurance have become empowered, thanks to the digital age. Customers are now moving towards companies that offer low premiums, even if there are other policies with better value. With the introduction of on-demand and pay-per-use insurance policies, conventional companies are facing.
It has become difficult for insurance companies to win over their customers, without making any compromises on their price margins. One way blockchain technology would help them is by reduction of unclaimed life insurance. A large number of beneficiaries are unable to claim insurance, on behalf of the insured people, as they passed away. The blockchain technology allows such beneficiaries to get rightful payments while retaining their anonymity.
Improved data efficiency
People who are involved with insurance companies are well aware of the fact that the data entry processes in the industry are quite inefficient. On top of that, as we are reaching a stage where everything is connected, customers are scared of hackers and other cybercriminals from accessing their data.
Blockchain technologies will provide the solution to overcome this problem, as it will improve security and efficiency simultaneously. The individuals have control over their data, while the blockchain verifies and registers them. Startups are also developing solutions where data transfer between insurance companies is secure, without the need to repeat verification and data entry processes.
Prevention and detection of fraud
Another huge problem that is prevalent in the insurance industry is fraud. Globally, insurance companies lose out billions of dollars every year because of various types of fraud. Blockchain technology can address this problem, by making it nearly impossible for cybercriminals to cheat insurance companies.
As blockchain is decentralized, it can verify the authenticity of transactions, policies, and customers independently. For example, if the insurance company had to validate one of their applicants, it will involve extensive use of resources. However, blockchains with their distributed registry can validate if the documents are authentic automatically. As a result of this, it will become easier for insurance companies to prevent and detect fraud.
It is in the hands of the insurance industry to make the most of blockchain technology. What steps the companies will take to change the landscape of the industry remains to be seen. However, it is clear that blockchain will have an important role to play in improving the industry, for both the companies and their customers!
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