Expect an explosion for insurance industry processes that need revolutionizing.
Blockchain, record-keeping technology that utilizes distributed public ledgers, has the ability to provide transparency, efficiency and security throughout a transaction. Blockchain was originally created to facilitate cryptocurrency transactions (such as Bitcoin), which are currently facing a downward spiral or “crypto crisis,” with demands for regulation and consumer protection. Blockchain, though, has managed to break free from negative associations and distinguish itself from cryptocurrencies. Early cases are beginning to abound for this seemingly endlessly useful technology.
Anyone involved in the insurance industry knows that technology is being deployed to innovate every aspect of insurance including underwriting, claims processing, fraud detection and prevention, and the development of new products. Customer expectations have likewise evolved for how they can interact with their insurers, as well as how products and services are delivered thanks to companies like Google and Amazon. Blockchain will be increasingly adopted to help solve two of the largest pain points in the insurance industry - claims handling and payments, and agent commission payments.
Blockchain’s shared ledgers integrate smart contracts, which turn paper contracts into programmable code. This helps automate the payment process. For policyholders, this means that coverage terms are more readily identified, require less manual entry which is susceptible to human error, and can speed the claims payment process so policyholders can begin the recovery process from a loss sooner. The same advantages will also help solve a long-standing pain point for the payment of agent commissions. Again, using smart contracts, commission percentages, which can vary from one agent/agency and product to another, are entered as programmable code and can be readily calculated from premiums produced. There’s less room for human error in the calculation, requiring less resources needed to sort out payment disputes - something that frequently occurs.
Early use cases addressing long-standing insurance pain points are just the tip of the iceberg. In 2020 we expect to see an explosion of blockchain adoption for insurance industry processes that need revolutionizing.
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