Due to their size and interconnectedness, these industries have long been out of reach for small players or emerging startups that need more resources to deal with them. The website Bitcoin Era app is known to provide instantaneous deposits, withdrawals, and trading strategies to bitcoin traders.
Blockchain technology has the potential to revolutionize this industry by drastically reducing costs and increasing transparency.
It sets a bold example for other insurance companies and opens up the possibilities of who could benefit from blockchain technology in other industries. As a result, the insurance industry is slowly but steadily adopting blockchain technology in its business model.
The emergence of blockchain technology has been a boon for the insurance industry, especially for sharing economy players like insurance companies. Blockchain could become an integral part of the insurance landscape within no time, as it is radically changing and disrupting this industry.
Although blockchain has a lot of potential in the insurance industry, it’s still at a critical juncture. It’s difficult to say whether blockchain will succeed or fail, but here are some points that could potentially boost the adoption of blockchain in the insurance industry:
First, blockchain technology comes with distinct advantages.
Insurance companies and policyholders can take advantage of some of its key benefits, such as transparency, immutability, and faster settlement. In addition, the lack of intermediaries would help the policyholders by considerably reducing their premiums. On top of these, there are other benefits like risk management and data security.
The insurance industry is highly regulated, and the technological disruption needs to be well planned out for better chances of success. Also, the industry is quite capital intensive; therefore, it needs a lot of capital to finance digital transformation.
Consequently, there has to be a well-thought financial plan which includes market research and analysis of various factors like regulatory framework, competitive advantage, and viability, especially in the present scenario.
The change in business model will be critical as insurance companies are used to operating on old business models limited by their existing structure. Let’s explore the advantages of blockchain in the insurance industry.
1. Smart contacts can automate claims in the insurance industry:
The application of smart contracts in the insurance industry will substantially impact business models, causing a wave of disruption in this sector. Intelligent contracts will do away with intermediaries, thus saving high costs.
It will also lead to faster resolutions and increased trust in the insurance process. For example, companies can use a smart contract to automate payments in case of an auto accident, thus eliminating delays and human errors.
2. Blockchain can eradicate clerical errors:
The processing of paper-work and amount settlement is quite time-consuming, involving several steps, like policy collection, verification, endorsement, and reconciliation. All these steps are susceptible to clerical errors, due to which there is always a possibility of policy being paid twice or not at all.
Blockchain will enable insurers and policyholders to track every transaction from when it’s purchased to being paid out. It will be instrumental in case of a claim, as all the records can be retrieved by people swiftly.
3. Lower premiums due to the elimination of intermediaries:
As mentioned earlier, blockchain would help eliminate intermediaries in the insurance process, thus saving a lot of money that users could use elsewhere. It would eventually lead to lower premiums and a better overall experience for the policyholders. It would also reduce fraud and make non-payment claims infrequent, thus improving trust in the insurance industry.
4. Accelerated fraud detection and claims processing:
Smart contracts would help accelerate the claims process. It will end dependency on intermediaries to collect documents and verify and validate policies, thus cutting down the red tape significantly. It will also allow faster KYC validation and a reduction in overpaying premiums.
5. Technology can work seamlessly with the existing processes:
The inherent flexibility of blockchain technology makes it well-suited for integration into existing systems with minimal risk. Since all technology is stored in the blockchain, it’s easy to integrate with other systems like ERP.
6. The policyholders can directly interact with the insurance companies:
As mentioned above, smart contracts will be instrumental in abolishing intermediaries and directly interacting with insurance companies. It would create an almost direct relationship between the policyholder and the insurer. It will also eliminate policies being manually processed. It will lead to reduced costs as less
paper-work would be required, thereby increasing the efficiency of supply chains.
Settlements would also become quicker as there would be no need for document verification or intermediate offices in a blockchain system, thus reducing delays in payment and the cost of handling claims.
With the use of blockchain technology, administrative costs will reduce to almost zero. However, the regulations would need to be enforced to gain mass adoption. It could be a significant challenge for this new technology. Blockchain Technology is continually evolving as it makes its way across industries.
Recently blockchain has been gaining ground in healthcare as well. It will allow for faster settlement and significantly lower payment delays within insurance claims and frauds due to manual paper-works and reconciliations processes.