Advancing technologies are disrupting and transforming industries far and wide. From Uber and Lyft and their collective impact on the consumer transportation industry to Airbnb, WeWork, Spotify and more, we are experiencing a golden age of transformation where technologies are fundamentally changing the way we live, work and play. Blockchain – a continuously growing list of records, called blocks, which are linked and secured using cryptography – has the potential to surpass these disruptors by a significant margin—if business leaders are willing to invest the necessary capital and time. Blockchain technology has already permeated industries far and wide. For the insurance industry, it holds immense transformative potential.
How so? The volume of documents and data shared within the insurance industry is immense. Between policy documents, premium payments, claims processing, claims payments and other activities, millions of transactions occur on a daily basis. Given the amount of data being shared, and the complex nature of the guidelines (e.g., coverage limits, reinsurance agreements, deductible amounts, premium amounts) that drive the insurance industry, this in many ways is the perfect industry for blockchain technology. Some of the more significant areas in which blockchain could disrupt the insurance industry are related to efficiency, transparency and claims processing.
Efficiencies and Transparency
If you have attempted to gain insurance coverage recently either for yourself or your business, you know the significant amount of time and effort that is needed. This, along with oftentimes exorbitant costs, are two of the main reasons why much of the country is uninsured or underinsured. Blockchain technology can mitigate some of these hassles and issues by enabling individuals to establish an identity that has all the necessary background information and is encrypted (i.e., a block). Carriers can be granted access to this verified and protected identity quickly and securely. The ease by which this information could be shared would hopefully lead to more transparency and a more competitively priced market.
Another major impact of blockchain technology relates to claims processing. As it stands now, insurance fraud and claims payment inefficiencies are two of the main issues affecting many carriers. The use of blockchain technology could lead to less fraudulent claims and quicker payment processing.
For example, the use of a blockchain registry in the life insurance sector could lead to quicker, accurate payments in a time of need for many families. The main issue in many life insurance cases relates to family members being unsure if the deceased is insured and unaware of where any documents reside. A blockchain would hold all of this information securely and with anonymity along with the millions of other individuals who have life insurance (i.e., a blockchain consisting of all life insurance policies in place). Upon death, any additional documents could be uploaded to the block. The carriers would then cross-reference this block and payments would be made once all criteria is met. As it stands now, without this technology, there currently are billions of dollars in unclaimed life insurance funds.
There are hundreds of uses of blockchain technology in numerous industries. Companies are already starting to invest in this tool due to the vast impact it could have. It is up to you to be a pioneer of change in your organization to ensure you are at the forefront of this growing technology.
Do you have questions about blockchain, or its potential impact on the insurance industry? Please contact us at 732-381-8887.