The insurance industry falls behind when it comes to familizaring itself with the core functionalities of blockchain technologies. In fact, it's a popular belief that unlike other financial services, it delays leveraging technology to revolutionize its business processes.
It's essential that the insurance sector evolves if it hopes to meet the demands of the ever increasing techno-savvy customers. It's high time it effectively streamlined its business processes.
Breaking Down The Challenges
There are a series of challenges that the insurance industry currently faces which can be aided by the effective implementation of blockchain technology. In addition to it's late adoption of technology innovations, the industry struggles in a variety of areas such as:
● Maintaining Customer Relationship
Customers are on the lookout for fast and convenient customer service where their needs are acknowledged, understood and addressed. This builds customer loyalty and reduces churn.
● Offering Bespoke Cover
The emergence of new insurance startups ready to offer bespoke solutions to niche players has proven a challenge for existing players in the industry.
● Managing Individual Risks
It's a challenge for agents to create and stick to frameworks that would focus on individual risks because of the lack of maintenance and access to proper database.
● Increasing Digital Transactions
The swift rise in digital transactions is proving a challenge for the late adopter insurance industry.
● Fraudulent Claims
Blockchain helps track any changes made in the data right up to the source – this makes it an excellent resource when it comes to tracking and verifying fraudulent claims.
● Evolution In Mature Markets
Blockchain helps streamline processes, increases speed, productivity and makes database management swift and easy. This leaves the organization scout for a larger market share by reaching out to untapped audience even in mature markets.
● Maintaining Transparency In Business Operations
Blockchain is a public ledger designed to store information which records the changes made to the source each time the information stored is altered in any way.
Blockchain’s ability to provide complete accountability, transparency and exceptional security will help insurers overcome today’s challenges and develop transparent operations built on trust and stability.
Additionally, the sudden spurt in digital transactions, fraudulent claims and evolution in mature markets have left many insurers wondering how to restructure processes while safeguarding sensitive information.
“The global average cost of a data breach is up 6.4 percent over the previous year to $3.86 million. - IBM
That is why insurers need a potent solution to manage heavy data interactions between multiple contributors including insurers, brokers, reinsurers and end-clients.
Insurance Industry Needs Blockchain Because...
Blockchain’s additional security and capability to establish trust between multiple entities are the reason it can help solve the system's compatibility problems. This makes it a more effective solution than the existing systems the insurance companies currently use.
Moreover, interoperable and comprehensive insurance records on the blockchain can be sourced directly from various locations like hospitals, government offices or automobile providers.
These records are currently stored within a single provider system. Using blockchain, insurers can upload the information to a shared blockchain. In case, the insured individual needs that information, he can track the details from the shared ledger through blockchain.
Blockchain To The Rescue
Blockchain can be the solution to a host of issues plaguing the insurance industry today. This unique technology can be effectively leveraged in a variety of ways to disrupt the insurance industry for the better.
Practical Uses Of Blockchain Technology
Complete Secure Platform Solution
Thanks to its use of public ledger, blockchain can theoretically eliminate suspicious and identical transactions by categorizing each transaction. Blockchain’s decentralized digital repository lets insurers verify the authenticity of customers, transactions and insurance policies by providing historical data. This process makes it tougher for hackers to corrupt and steal data and stop fraudulent activities.
Watchdog For Third-Party Transactions
Blockchain allows insurers to handle increased third-party transactions and claims made using personal digital devices. This advanced technology helps in reducing administrative tasks and cost through automated verification of claims and payments processed by third parties.
Insurers can quickly view past claim transaction history registered into a block for instant procedures. This way blockchain endorses a high-level of trust and loyalty between the insurer and the customer.
Smooth Management Of Huge Data
It's a daunting task for insurance companies to manually handle a huge log of data. Blockchain technology allows insurers to easily manage, share and monetize this data. The core benefit of blockchain where static data can be stored without central co-ordination which can be then be viewed by the stakeholders – makes it a radically powerful resource.
It uses existing data and stamp by creating a digital signature/fingerprint which adds another layer of transparency and security. This streamlined data can further optimize the effort and time needed for accurate risk calculations.
Smart Contracts For Smart Industry:
Policy contracts are a major part of the insurance industry. Blockchain helps convert these contracts into personalized contracts. These contracts connect real-time data and activities from multiple systems including documents to accurately execute processes like claims and reimbursements with speed. See how our team has built value for the insurance sector with a disruptive Blockchain-based solution.
Data Accuracy For Boosting Reinsurance
Blockchain can offer accurate renewal calculations based on current contracts within the reinsurance domain. This helps a variety of insurers who wish to know the available balance upon payment of claims. Advancements of blockchain ensure that they rebalance their disclosures against specific risks. This acts as a great source of motivation for insurance companies once they begin to reap the benefits of smooth business operations on a daily basis.
The good news is that several insurance companies have already begun to embrace the advantages of blockchain applications. Enterprises like Allianz, Aegon, Swiss Re and Zurich have initiated the B3i (Blockchain Insurance Industry Initiative) for those who intend to explore the potential of blockchain technology to serve clients.
Soon, the world will witness a change in the insurance where traditional insurance service providers and entrepreneurs will come together to exchange value and information through blockchain so that everyone can take benefit and enjoy the true potential of blockchain technology.
Cygnet Infotech is proud to be at the forefront of leading this innovation through its bespoke blockchain solutions for insurance industry. Reach one of our experts today if you would like to know more about leveraging this unique, hassle-free technology for your business - call on +1-609-245-0971 or write to us at email@example.com.