The way different businesses operate and interact with each other has drastically changed with the advent of the digital revolution. Over the years, the impact of technology has been profound, not just in terms of making our lives easier, but also in terms of our working pattern, i.e. the way an industry carries out tasks, solves problems, and resolves issues.
Blockchain, in recent years, has played an important role in this digital transformation. Industries like finance and insurance welcomed blockchain with open arms. According to MARKET RESEARCH FUTURE, the global blockchain within the insurance market had a market value of USD 62.53 Million in 2018 and is expected to reach USD 1.42 Billion by 2024, registering a 69.72% CAGR during the forecast period 2019–2024.
What is Blockchain?
Blockchain is a type of database and to have a clear understanding of blockchain, you need to first understand what a database is.
A database is a collection of information that is stored automatically on a computer system. Information or data in databases is usually structured in a table format that allows easier searching and filtering for specific information.
All blockchains are databases but not all databases are blockchains as there is a big difference between the two. A database is for a limited amount of information that is stored and structured in table format while a blockchain is for a large amount of data, stored in block formats.
A blockchain collects information together in groups, also referred to as blocks, that hold these sets of information. These blocks have certain storage capacities when filled, are linked onto the previously filled block, forming a chain of data known as the “Blockchain.” The new information that follows that freshly added block is compiled into a newly formed block that will be automatically added to the chain once filled.
Blockchain for Insurance Business
The insurance industry understands that it must evolve to stay competitive, which means streamlining processes and meeting the demands of digitally savvy customers. The application of blockchain technology can help insurance companies overcome today’s challenges and create transparent operations built on trust and stability. Furthermore, data being the most important resource of the insurance industry needs to be secured and managed at the same time and blockchain does a better job of doing so than any other database.
Being amongst the largest operating industries, insurance companies face several challenges daily, such as complex compliance issues, limited growth in mature markets, fraudulent claims activity, third-party payment transactions, and handling huge amounts of data but this is where blockchain comes to the rescue.
Now let’s understand how to book the above services:
1. Smart Contracts:
Smart contracts powered by blockchain could provide insurers and customers with a means to manage claims in a responsive, transparent, and irrefutable manner. Contacts and claims could be recorded onto a blockchain and validated by the network, ensuring only valid claims are paid. Such as with blockchain applications, an insurance company can reject multiple claims for one accident because the network would know if a claim has been made already
Smart contracts would also enforce the claims i.e. triggering payments automatically when certain conditions are met and validated.
The application of blockchain technology in insurance eliminates suspicious and duplicate transactions by logging and keeping track of each transaction. Blockchain’s decentralized digital repository can verify the authenticity of the customer, their policies, and transactions by providing the records, making it difficult for hackers to corrupt or steal files.
3. Big Data:
in this era of connected devices, the need to keep up with the technology caused a spike in the amount of data insurance companies need to handle and update every day.
With the help of blockchain, insurance businesses can properly manage and share a large amount of data. This data can be viewed by all parties at the same time and is secured with security features like digital fingerprints, thus providing better protection and transparency.
4. Third-party transactions:
Blockchain can handle the increase in third-party transactions and claims made through personal digital devices. It helps reduce administrative costs through automated verification of claims/payment data from third parties. Insurance companies can quickly view past claims transactions registered on blockchain for easy reference. This promotes higher degrees of trust and loyalty between the insurer and customer, enhancing customer satisfaction.
Blockchain is a decisive factor in the digital transformation of the insurance industry, helping it to break free from outdated traditions. The need for insurance innovation is critical as customers are craving transparency, speed, and cost flexibility and blockchain provides all three. It is designed to deliver on these desires and meet all the participants’ particular expectations.
When there’s little to no chance of fraud, people will trust their insurance agents more. When complex policy claims are processed 10x faster, there’s no room for friction. At the same time, when claim processing is automated, insurers have more possibilities to be flexible with pricing.
With more blockchain-based applications going live and more insurance companies entering into collaborations, maybe it’s time for your company to jump right into it. With the help of leading blockchain development companies like Jellyfish Technologies, you can take advantage of this advanced technology.
Jellyfish Technologies is one of the early adopters of blockchain and over the years has developed good competency in developing blockchain-based solutions. The JFT team is proficient in implementing private blockchains and smart contracts, integrating API into the blockchain, and other custom requirements.