In the coming years, it is expected that every major company in insurance will be deploying blockchain in some form, as the number of applications the technology can bring to the sector grows every day, according to Research and Markets.
The business intel firm projects blockchain market gear toward the insurance sector is poised to grow 57%, compounded annually through 2026. This is bringing massive opportunities to FinTechs as well as insurers willing to embrace the change.
Among the most promising features of blockchain with applications for insurers are smart contracts, which can provide the means to handle claims through a process that is transparent, responsive and irrefutable, Research and Markets reported. Transparency is among the keys to meeting today’s consumer expectations, as Salesforce.com, Inc. reported that 82% of customers said trust in companies matters more now than it did a year ago.
Smart contracts also have the potential to streamline and improve efficiency in the claims process, in turn boosting customer satisfaction. In addition to offering transparency, they can also speed up the claims process by automatically triggering payments when certain conditions are met.
Streamlining processes with smart contracts
Smart contracts can be designed to accept data streams from telematics devices, according to the market research company, and in the event of an accident, could input the data stream from a connected car onto a blockchain, automatically raising insurance claims and potentially even triggering a payout if certain conditions are met. Blockchain could also leverage data to recommend reputable service stations in the area and call for medical assistance should it be deemed necessary.
Additionally, contracts and claims could be recorded onto a blockchain and authenticated by an insurer’s network to confirm only valid claims are paid. It is important to note that once data is entered onto a blockchain and validated, it is nearly impossible to change without detection. This also allows for the potential of artificial intelligence to verify and settle a claim in real-time.
The market research company noted Asian-Pacific markets could serve as a sandbox for deploying blockchain in the insurance supply chain, as the region offers the opportunity to experiment with low-cost innovations and open regulatory frameworks around the technology. Highlighting this final point, although Chinese regulators have imposed harsh regulations on blockchain-backed cryptocurrency activities, the country is incorporating blockchain technology into its five-year state-development plan.