Blockchain technology is defined as a comprehensive time-stamped data record that is not managed by a single entity but spread across thousands of computers around the world. It has already established itself as one of the biggest factors that will affect the way insurance works for companies like http://www.singapore-insurance-empire.com/ in the future. In this article, we assess those changes and analyse the factors that may influence the future.
What is blockchain?
In simple terms, Blockchain is a digital log that allows people to conduct transactions amongst each other without depending on a third party to verify the transfers. Cryptocurrency is the name of the currency in which you can deal in a blockchain and is a crucial factor in running the blockchains. Anyone can see the information, and the system is extremely transparent with each entity answerable for their processes. It is considered relatively safe as well because it has cryptographic principles applied.
General impacts of blockchain
Blockchain has undoubtedly changed the way business is being conducted. Just in the past 18 months, 450+ new blockchain related industries have been established in the United States.
Some of the immediate impacts are for third party certificates because it allows manufacturers to keep track of all their supplies and monitor the procedures to analyse the proper standardisation. It also allows new businesses to deal directly with prospective clients instead of having to use back to the grid redistribution. For people who work remotely, it will enable them to do the job and get paid directly instead of going through longer payment processes.
Blockchain is also already impacting the insurance industry, and companies are developing blockchain based solutions for insurance which will have significant implications for the future.
How blockchain entered the insurance industry
It did not take long for people to realise that blockchain has more benefits than just providing an alternative currency. The source code has allowed developers to come up with new chains that can help with any transaction.
At the initial stage, it was evident that blockchain helps in identifying if various terms and conditions regarding transactions have been met, but it took some time to finally make sure that companies could store their laws and regulations online and that led to the creation of smart contracts.
This means, in future, there will be less dependency on lawyers and third parties to get the jobs done and verify the payments. For sure, they will have some role to play, especially when it comes to taking advice or discussing any issues but with regards to contracts and obligations, it seems they will have a limited part to play.
In hindsight, it’s too early to talk about the impacts overtaking the legal industry, but for sure there are several impacts of blockchain on the insurance industry.
How will it affect the insurance industry?
The insurance industry is full of middlemen such as insurance brokers and agents, and many companies provide several policies for people to choose from, which is an arduous task. Therefore, the insurance procedure can be significantly impacted by streamlining and getting rid of agents, brokers, lawyers and claimers.
People will have the ease of uploading all their information online by going through the verification process provided by blockchain which means you are able to get rid of the agitation sometimes caused in dealing with an insurance company who can take days to verify your data for providing quotes. Once the information is there, you can get instant quotes, thus saving time.
● Faster Claims
If you are protected against something according to your insurance, then it will become straightforward to verify the incident and the clauses since all the data is accessible in real time and will be authorised leading to fewer complications.
● Fraud Detection
Around $40 billion is lost through insurance fraud every year. By moving everything through the blockchain, you can automate procedures, meaning there will be fewer possibilities for fraud because there is no third person involved.
● P&C and Health Insurances
A shared record and laws that are executed through blockchain helps to improve property and casualty insurance and to change the way things are done. Because it takes a lot of time to close the deals, having smart contracts can reduce the times and problems massively. Thanks to blockchain technology you can keep your medical records online and share them with the medical service providers immediately.
● Risk Assessment
You can get incentives from insurance companies if you take steps that reduce the risks for your company. All the actions will be recorded online which means you won’t be required to go through the rigorous risk assessments processes again and again.
● Personalised Policies
Your profile is present online; all the data is already there and verified which makes it a lot easier for insurance providers to check your information, know where you are coming from and then provide you with better more personalised offers that suit your requirements.
By simplifying the processes and smart contracts, the flow of information can be speeded up, allowing for timely payments between the lender and the customer. Also, you eliminate the chances of missing out on the contract as you can sign and regulate them through blockchain technology.
What the future holds?
There are exciting changes taking place in the insurance industry thanks to blockchain and a couple of examples are shared below.
Recently, French Insurance Company AXA introduced smart insurance that pays people if their flight gets delayed for a specific time. The flight details are linked with blockchain and trigger the terms immediately. Cash is paid without filing a claim. Similarly, a Singapore blockchain company, AIX, will soon introduce insurance for the Internet of Things for devices such as phones and drones since they are already linked.
Blockchain technology is still new, so it will take some time before it impacts all of the processes around in the world, but the signs are positive. There may be some drawbacks along the way, but things are moving in the right direction for blockchain impacted insurances.