Insurance giants and startups alike are using blockchain technology to prevent insurance fraud, track medical records, file claims, and more.
Insurance has been around for centuries. As early as a thousand years ago, Chinese merchant seafarers were pooling together their wares in collective funds that would help pay for the damages of any individual’s capsized ship.
While technology has permanently changed entire industries over the past decade, in many ways, the multi-trillion-dollar global insurance industry is still stuck in the past with little innovation made in the customer experience.
Despite the rise of online brokers, many consumers still call insurance brokers by phone to purchase new policies. Policies are often processed on paper contracts, which means claims and payments are error-prone and require human supervision. Compounding this is the inherent complexity of insurance, which involves consumers, brokers, insurers, and reinsurers, as well as insurance’s main product — risk.
Each step in this collaborative process represents a potential point of failure in the overall system, where information can be lost, policies misinterpreted, and settlement times lengthened.
Enter blockchain technology, a cryptographically secured form of shared record-keeping.
While blockchain technology has been subject to waves of extreme hype often centered around cryptocurrencies like Bitcoin, its true killer applications are likely to be in some of the most antiquated fields out there. It could be a transformative force for industries like insurance, which require the coordination and cooperation of many different intermediaries with different incentives.
Of course, getting there will be no mean feat. Insurance companies and startups working with blockchain technology will have to overcome significant regulatory and legal hurdles before we see anything resembling industry-wide disruption. Skeptics point out that there are serious obstacles for blockchain technology in an industry that has been slow to embrace even cloud computing.
But the possibilities are abundant, and insurance companies and startups alike are experimenting with insurance applications for the technology at full throttle.
These applications include:
- Fraud detection & risk prevention: By moving insurance claims onto an immutable ledger, blockchain technology can help eliminate common sources of fraud in the insurance industry.
- Property & casualty (P&C) insurance: A shared ledger and insurance policies executed through smart contracts can bring an order of magnitude improvement in efficiency to property and casualty insurance.
- Health insurance: With blockchain technology, medical records can be cryptographically secured and shared between health providers, increasing interoperability in the health insurance ecosystem.
- Reinsurance: By securing reinsurance contracts on the blockchain through smart contracts, blockchain technology can simplify the flow of information and payments between insurers and reinsurers.
- Life insurance: Blockchain technology can take the burden of filing a death claim away from family members by replacing the manual process of filing claims with an automated system built on a blockchain ledger.
- Travel insurance: By automating claims processes and efficiently sharing information between stakeholders, blockchain travel insurance can save insurers time while reducing the burden on travelers.
Download the full report for a deep dive into how blockchain technology is disrupting the insurance industry.
See how blockchain is transforming other industries in our report on the 65 big industries blockchain could disrupt.
Table of contents
- Fraud detection & risk prevention
- P&C insurance
- Health insurance
- Life insurance
- Travel insurance
- Moving towards a blockchain-powered insurance industry