There is a great deal of potential when it comes to blockchain technology – use in insurance. In fact, block chain technology has the capability of changing a great deal about the world in general. But for the insurance industry in particular, it could change the way that insurers share data, process insurance claims and create policies for fraud prevention. However, right now block chain technology is barely being looked at by insurance companies. There are a few scattered early adopters, and many insurance companies intrigued by the technology, but widespread use and adoption is a long way off.
If the insurance industry can work with startup companies, as well as those who are making the regulations and laws for block chain technology in cryptocurrency (Bitcoin etc.), then everyone can figure out the best way to move forward with this technology together. Blockchain certainly has challenges when it comes to the insurance industry, but there is also the potential for a great deal of innovation.
Blockchain technology – use in insurance. In order for the insurance industry as a whole to become open to block chain technology, individual insurance companies need to start thinking about how they can utilize block chain technology with their internal processes to be able to use the technology as it becomes better and more prevalent.
The first thing that you have to ask yourself is whether or not you understand exactly what block chain technology is. The word is being used by the media and lots of different people in the tech industry, but not everyone is clear on exactly what blockchain technology is. Because of the potential to change the insurance industry completely, those within that industry need to understand the definition clearly.
Blockchain is simply a distributed ledger that is transferred peer to peer. These ledgers contain records of transactions and are called blocks. Because of the way that they are verified, it is almost impossible to corrupt them or to modify the state of Bitcoin anyway. Every block links back to a previous block, as well as has the time and date stamp, and the entire system is self-managed and doesn’t require any sort of third-party.
There are several areas where block chain could have a major impact on the insurance industry. Right now, blockchain technology is just beginning. Even so, experts are predicting that is going to have a huge impact on a number of industries including insurance. Some of the ways in which it will affect insurance specifically includes the following:
First, block chain technology will help to increase trust between financial entities, insurance companies and the consumer. Because of the high costs and inefficiency that plague the insurance industry, some people are getting insurance even when they need to. Consider places where home damage from tornadoes or earthquakes is not only possible, but are quite likely in some cases. Even in those areas, only a lower percentage of homes carry insurance against that possibility.
The second thing that block chain technology may be able to do for insurance companies is to eliminate or minimize inefficiency. It is obvious to most people that data entry is extremely inefficient when changing insurance providers, and consumers have real fears that their data is going to be subject to hacking. This fear comes from the fact that it is happened before. Blockchain technology may be able to provide a solution to both problems, and there are companies out there right now that are working on implementing it.
Finally, fraud detection and prevention of fraud is one of the most exciting parts of block chain technology. In fact, this is probably the primary reason that insurance companies should check out block chain technology for implementation within their own systems. The FBI estimates that somewhere between 5% and 10% of insurance claims are fraudulent, and it costs insurers big money. But because blockchain technology require such strict validation, fraud is almost nonexistent. The historical record and decentralized ledger repository make this technology one of the best tools that insurers could have when it comes to protecting themselves against fraud.
We hope this article on blockchain technology – use in insurance. has been informative. The use if this technology in insurance is interesting for sure, but it’s still in the early days of its implementation and uses for the insurance industry.
