How can blockchain technology help reduce insurance costs?

You can read the answers to this intriguing question in the article below. Make yourself comfortable. Let’s figure it out now!

Modern insurance is a huge market. In the United States alone the volume of insurance premiums paid overcame trillion dollars. Despite such volumes, the industry is experiencing difficulties. Insurers suffer from deception on the part of their customers, struggle with paperwork, and constantly spend resources on data verification.

  1. Huge amounts of information are still processed on paper, which creates an enormous document flow, which increases the costs and time for consideration of applications for insurance compensation and entails additional risks of information leakage.
  2. The cost of insurance is overstated and includes a lot of extra costs that can be optimized.
  3. It can be difficult for the insurer to correctly assess the risk so that the amount of the insurance policy is not overstated or understated.

To remedy the situation to consider blockchain technology as a distributed registry could be a progressive solution.

Blockchain reduces insurance risks, increases trust between the parties, speeds up the verification, and automates the procedures.

The people working in the blockchain industry for years are real experts in their field. After all, it is thanks to their professionalism that you will be able to solve any custom tasks!

How is blockchain technology used to detect fraud?

To combat fraud, it is possible to establish better coordination between insurance companies. Insurers can make a record of a permanent transaction and publish it in a distributed ledger with detailed access control to ensure data security. This, for sure, will help to store and transmit information about claims to other insurers, thereby identifying suspicious actions.

The next stage of development for the insurance industry is to organize the joined database of all the car owners, insurance requests, participants of the car incidents, and registration of the complaints. The main issue, in this case, is personal data protection. And it’s the place when blockchain technology came to the stage. Verification without data disclosure provides the parties to get the confirmation of the data’s correctness while removing the middleman.

Automation of many of the procedures leads to a more transparent insurance market and will simplify the processes.

Increasing trust between participants and the possibility of reducing tariffs as motivation is the engine for the entire insurance industry. Increasing trust is possible due to the immutability of data in the blockchain, and reducing tariffs is due to the automation of processes, reducing the number of intermediaries, eliminating fraudulent schemes in insurance, and motivating such behavior of policyholders, which leads to a decrease in the likelihood of risks.

Insurance companies are already using blockchain, but unfortunately, it is still very far from creating a unified network.

Therefore, in order to implement blockchain in insurance, it is necessary to develop technologies and interactions between insurers.

One more effort is to be made to overcome legal and regulatory barriers to let blockchain become a standard technology in the insurance industry. But the possibilities of the technology are obvious, and insurance companies are actively interested in its implementation.

Summing up, it can be noted that blockchain technology will lead to a significant increase in efficiency, lower costs, faster payments, and, most importantly, fraud prevention while allowing real-time data transfer between different parties in a reliable and traceable manner. Blockchains can also enable new insurance practices to create better products and markets. In addition, blockchain will make it possible to conduct secure decentralized operations, as well as increase efficiency, cost optimization, and transparency of processes.

Levi Eva
the authorLevi Eva