The concept of insurance has its existence since ancient times. Almost every generation has used the insurance concept to control the effects of damages.
Much has changed over the years; the development of technology has brought some major shifts in the present world but the insurance sector remains backdated. Despite of having various online insurance options, many people still prefer going to agents and get their insurance right.
As significant improvements are being made in the sector, the introduction of blockchain or disruptive ledger is revolutionary. It uses advanced cryptographic techniques to create a safe and secure place for data that prevents window dressing and improves transparency.
A blockchain can record anything from physical to digital assets, once a transaction is carried out it is grouped and then protected in an online block which is available on a larger global network, to which only authorised parties can get access to.
The advantage of Blockchain
The key advantage of introducing this technology is data security and it can also create a clear audit trial. Also, as blockchain system are unchangeable and does not require oversight by any central authority, use of a distributed ledger creates new
path for much secured collaborations between competitors by removing the qualitative aspect of trust between third party organisations
The other advantages are
Insurances require a lot of red tapism, it creates delays and makes the parties lethargic. The blockchain technology will fasten up the process. It not only would create hassle free sign up for the policyholder but also would make the document verification process for the insurer easier.
Easy Claim Verification
Since, everything is handled in real time, all the important dates related to the insurance would be updated timely. It will make the claim process simpler and smoother for both parties. Hence, a system would be developed where claims are managed, verified and paid quickly.
When everything is online and real-time the chances of fraud are automatically reduced. No party can cheat on the other and therefore, a trust and goodwill factor is always maintained.
Ease in health Insurance
After the introduction of blockchain in health sector, secured data like medical reports, charts, and receipts etc can easily be shared between health providers and the patient. The same block data can also be made visible to insurance companies and therefore they can keep a track of their insurance holders. This will make the process of seeking and claiming such insurances easier.
General improvement of value chain
Once everything is updated regularly and even the customer has access to the same database, a flow of information and payments, henceforth, we can say that the blockchain technology will create a value for both sides of the table.
Problems in introduction of blockchain in insurance market
Though the idea is a win-win to both parties, its introduction in the market isn’t easy and the insurances are bound to many complications and legalities making it completely cloud and block based is risky. The blockchain technology still cannot overcome the legal and regulatory hurdles.
Moving toward a blockchain - backed-up insurance industry can be a distant dream but companies like Allianz and Swiss Re and various new start-ups are finding a solution.
From the perspective of an industry as a whole, insurance companies have to align around standards and limitations within the blockchain technology. While this system can provide insurers with better means for collaborating and sharing data, the insurers themselves should be willing to work together.
The technology itself must also be developed further and shall overcome the existing hurdles. Public blockchains, where each transaction on the ledger is visible and accessible to everyone, are unfeasible for the industry due to privacy and security concerns. Private, active and permissioned blockchains are yet to be developed.
Lastly, the insurance industry is highly regulated to safeguard customers from abuse and cannot risk breach of data. Legal and regulatory frameworks for insurance services need to evolve and provide proper framework for this technology to bring it to practice.