The increasing cost of insurance-informed customers and technological innovations are among just a few challenges being faced by insurance companies. Therefore the industry is looking forward to innovative solutions such as Blockchain that can potentially solve these problems.
The insurance industry grew from $5,376.92 billion in 2021 to $5,838.43 billion in 2022 at a CAGR of 8.6%. In addition, it is further expected to grow to $7,349.27 billion in 2026 at a CAGR of 5.9%.
As the industry expands, so does the competition amongst the insurance giants. As a result, the companies are adopting cutting-edge technologies by partnering with a software development company to ensure that they offer the best insurance options to potential customers.
Moreover, there are multiple problems, such as inefficiency, fraud, human error, and the most distressing of all – cyberattacks. For example, in 2015, Anthem Insurance confirmed a data breach that exposed the personal data of nearly 80 million customers.
Blockchain in the insurance industry has massive scope. It provides the ability to build trust in a trustless ecosystem through public ledgers and fortified cybersecurity protocols. Therefore it has massive positive implications for the future growth of the insurance industry.
Read More: Top 7 Insurance Technology Trends to know in 2022
Benefits of Blockchain for the Insurance Sector
Insurance companies are among the few sectors either scrambling to determine Blockchain or have already adopted it in many ways. The main aim is to make sure that the Blockchain should help reduce costs, manage risk, improve customer service, and more.
A trusted enterprise software development services company can help you implement Blockchain in many ways. The four benefits below highlight how Blockchain can benefits the insurance industry –
- Smart Contracts
- Smart contracts can transfer the Blockchain participants anything of value without needing a middleman. Just like physical contracts, smart contracts set the terms and conditions of an agreement between two parties.
- Smart contracts can track insurance claims and hence hold both parties accountable. The insurance policies can be written as decentralized smart contracts binding on all signing parties. The insurance company is obligated to cover any cost that is covered under the contract for an individual or an organization.
- Blockchain-backed smart contracts create data based on the insurance policy owner’s records that can, on its own, accept or deny any insurance claims made to the company.
- IoT and Blockchain Structure Data Together
- As per statistics, there are approximately 13.15 billion connected IoT devices. The amount of data that will be generated from these devices will be significant. The data generated will be highly influential for insurers in developing accurate actuarial and usage-based insurance models.
- The data allows insurers to manage large and complex networks on a peer-to-peer basis. However, managing an enormous volume of data is a huge challenge that Blockchain can help with.
- The insurance app development company can install Blockchain solutions in place of expensive data centers. Blockchain solutions offer a decentralized platform to store and process data.
- Cybersecurity
- There is a huge risk to data security in the insurance sector. The revenue in cybersecurity is expected to grow from $6.4 billion in 2020 to $10.6 billion in 2025.
- Blockchain can protect personal consumer information. The Blockchain ledgers are decentralized, and therefore they can not be manipulated by a single authority. Furthermore, all the data stored on the Blockchain networks is timestamped to ensure a clear recording of events.
- The Blockchain data is encrypted. Therefore, all the members on the node can view the action of each individual whose true identity remains hidden. This structure of Blockchain helps to detect and deter any unusual behavior rapidly.
- Advanced Automation
- A single insurance company consists of many insurers. Therefore it’s highly possible to feel the pressure of losing money due to inefficiencies hiding behind billions of forms, human errors, poor communication, and much more.
- The digital insurance applications backed by Blockchain technology can help in the quick automation of outdated processes and therefore help save the time spent on tedious paperwork and thus also reduce paperwork since all data is safely stored along the chain.
- The communication between parties is also improved through distributed ledger technology. For example, doctors and insurers can safely access patient health records to determine the correct policies and procedures.
Read more: Top 7 Reasons to Hire a Insurance Software Developers
Top Blockchain Use-Cases in the Insurance Industry
Many companies are providing leading Blockchain solutions to insurance companies. Here are a few examples of Blockchain in the Insurance Industry –
- International Business Machines (IBM)
- IBM’s Blockchain initiative has streamlined various aspects of the insurance industry. The company has assisted the insurance industry in automating its underwriting and claims processes.
- The technology has helped in the reduction of completion times and fraudulent claims. In addition, it has enabled insurers to increase trust with their customers and deliver more efficiently.
- Nationwide
- Nationwide Mutual Insurance Company is a group of large U.S. insurance and financial services companies. It is among the few insurance companies using Blockchain.
- The company joined RiskBlock Alliance, the risk management and insurance industry’s first-of-its-kind blockchain consortium. It is among the first few that have adopted the alliance’s blockchain platform.
- The insurance software solution has enabled safer and faster proof of insurance to allow customers to verify their information with law enforcement and continue the quick claim process.
- Tierion
- The company creates technology and products that reduce the cost and complexity of establishing trust. The company equips insurance companies with Chainpoint and Proof products to help them record, track and verify data.
- The company’s technology expands in claims processing areas, reducing the time and money spent on each claim process, reducing false claims, and more.
Conclusion
Blockchain has made a massive dent in insurance app development solutions. It has transformed how insurance companies do their business.
Blockchain technology helps to increase trustworthiness. It helps to create smart contracts. Since Blockchain is an immutable ledger, smart contracts can enable trustworthy, timely, and transparent transactions.
Insurance companies work in a highly competitive environment where customers seek the best value for their money. With the help of low-cost smart contract transactions, insurance companies can provide better products at competitive prices.
Are you interested in building a Blockchain application for your insurance business but need to learn how to implement Blockchain in insurance? Then BoTree Technologies can provide insurance application development services for building a futuristic platform to meet all your needs.
Contact BoTree Technologies for a custom insurance app development service today.
Frequently Asked Questions
What is Blockchain? How does it impact insurance business?
Blockchain is a distributed ledger that is shared between all the members of the nodes of a computer network. It supports the insurance industry by enabling automated payments between parties, faster claims approval, and reduced fraud claims and costs for insurance companies.
How can Blockchain improve customer satisfaction in the insurance industry?
There are four primary ways in which Blockchain can improve customer satisfaction in the insurance industry –
- Improving the security
- Reducing the cost of insurance service
- Increasing the efficiency of the claims process
- Increasing transparency by creating a tamper-proof audit trail
Is Blockchain too complex to understand?
Blockchain is complex, and therefore it may make it hard for users to understand and work with. Therefore it is advisable to hire an insurance application development partner that can work on creating Blockchain solutions. BoTree Technologies can help you create the best insurance applications that ensure complete customer satisfaction to the clients.