Banking and insurance industry are the two which have embraced the blockchain technology open heartily but have not been able to optimize the tech to overcome the existing challenges. Insurance industry understands the need to evolve to remain competitive and especially for digitally savvy customers. The industry needs to streamline and pace up it process with data security an utmost priority in which blockchain can help to overcome existing challenges and build a much transparent and trustworthy process.
Insurance companies are currently facing multiple issues such as complex compliance issue, fraudulent claim activity, third party transactions and the huge volume of data. With rapidly growing data insurers have to sift through to provide personalized and enhanced service. And with digital transactions, it has become hard to streamline the processes. Although blockchain is in research and development phase still it holds the potential to resolve the current problems.
• Security: Decentralized ledger of blockchain can store voluminous and avoid redundant entries also it validates each user before they can access the data which mitigates the risk of hacking and data stealing. Blockchain ledgers are cryptographically secured which makes it trustable for storing sensitive data.
• Transaction Management: Blockchain can easily manage third-party transactions and increased number of claims. As it keeps the record of each transaction, insurance companies can view previous claims and transaction giving them better insights into customer’s insurance history.
• Transparency: As the distributed ledger is immutable, data once stored cannot be modified or tampered and also is open to view for all on the same blockchain network. These features will bring transparency in insurance procedures and policies and build trust between customer and insurance companies. Immutability will also leverage insurance companies to combat against fraudulent claims and save their cost.
• Smart Contracts: Personalized contracts have shown up which are capable of connecting with multiple systems in real time and trigger claims, payments and reimbursement saving time and money of insurance companies. Also, these contracts will provide better customer experience with their automated process.
As stated earlier that technology is still to be explored and many more applications and features will show up in future that will be able to combat current problems and build a faster, more efficient and cost-effective ecosystem for both insurance company and customer.