The insurance industry has experienced tremendous shifts over the last century. From ditching traditional paper-based systems to digitalizing the most time-consuming processes, insurance carriers have improved their flexibility and capabilities with the changing times.
And one of the most powerful technologies that have helped transpire this radical change is Blockchain.
While Blockchain technology is hyped for its usage in cryptocurrency, it has been a major disruptor in the insurance industry. In this article, we will explore the impact of Blockchain technology on insurance, what’s next for the industry, and how it will impact your business.
The Impact of Blockchain Technology on Insurance
For years, the customer experience in the insurance sector was getting compromised due to a lack of proper CX strategy. Research by IBM shows that 64% of customers want insurers to understand them well. The goal of using blockchain in insurance is to keep customers at the center of every process. This includes simplifying the complex underwriting and claim settlement process.
Let’s explore how the blockchain-powered insurance industry has made a difference!
- Making Claim Settlement Cheaper and Less Time-Consuming
The game-changer in the claim settlement process is Smart Contracts. These virtual agreements are stored in Blockchain and execute actions when certain parameters are met. Because smart contracts are automated, you don't need intensive paperwork and spend hours reconciling statements.
As the insurance industry requires the coordination of multiple intermediaries - insurers, brokers, and the insured claim settlement can take a lot of time. Instead of manually settling each claim, smart contracts enable these parties to collaborate efficiently, codify rules, and automate the process.
Let’s look at this chart to understand the process in-depth!
With no need for record-keeping and reduced manual labor, you can save costs on the entire process and offer customers a seamless claim filing and settlement experience.
- Reducing Frauds
Fraud has risen in the industry at a staggering rate. Studies show that fraud and cyberattacks cost insurance companies almost $308.6 Billion. This calls for an impenetrable record-keeping system.
By moving claims, customer records, and financial transactions to an immutable ledger, you can secure your business from fraud, such as identity theft, eligibility fraud, and more. The blockchain-powered insurance industry also fosters a transparent and collaborative culture for all the parties involved.
As every party can key in the records on a distributed ledger, there is no tampering or counterfeiting, allowing risk-free data flow and seamless claim processing.
- Helping Insurers Develop Innovative Insurance Products
Like every other industry, customers demand new and innovative products from the insurance industry. The sudden onset of the pandemic, geopolitical instabilities, and rising health concerns have forced insurers to adopt a new mindset and create better avenues for value creation.
And the best way to find value is through data.
With an amalgamation of technologies like Blockchain, Big Data, AI, and Cloud, you can leverage data to get insights and create innovative insurance solutions that add value to customers.
For instance, insurers, such as Toggle, offer customizable policies and coverage plans to small businesses and individuals to meet their complex needs. Customers can choose a wide range of coverage options, including coverages for expensive phones, tablets, cameras, and more. Many insurers are also experimenting and offering flexible health insurance policies that help customers bundle different products and extend protection.
- Advanced Automation
Disruptions in the insurance industry have helped it take great strides in improving its CX strategy. But automation remains a challenge. Recent reports indicate that insurance companies struggle to integrate their system with data and achieve advanced automation.
For years, the insurance industry was bogged down by massive data sets and inefficient legacy systems, leading to poor communication between all parties.
Blockchain offers an efficient and systematic way of storing data in an immutable ledger, where every entry is distributed among multiple parties, enabling seamless communication. With your data secured and easily accessible, you can integrate technologies like RPA to automate most customer functions. The blockchain-powered insurance industry has helped many companies automate their underwriting and claim settlement process to prevent misuse and increase speed and accuracy.
What’s Next For the Insurance Industry?
We have talked about the different disruptions in the insurance industry, including the application of blockchain. Let’s talk about what’s next in store for the industry.
- Combining Technology and Human Touch: We have talked about how blockchain has helped insurers automate claim processing from start to finish. However, some complex claims still require human intervention. The next step in the insurance world is automating tiresome processes and letting manual interactions happen at crucial points. This is going to speed up the entire process.
- Forming Strategic Partnerships: Insurance carriers are working on expanding their portfolio by forming strategic partnerships with distributors and third-party vendors. Group insurers are also becoming innovative during challenging times.
- Focus on Customer Service: Chatbots, self-help services, automated emails, and more will help insurers improve customer service and gain a competitive advantage.
- A Connected World: Insurers will use technologies like IoT, Blockchain, and AI to gather data and analyze it accurately for better claim settlement. Working together with technologies will strengthen trust and transparency and reduce cost friction.
Create an Outcome-Driven Environment For Your Business With Blockchain
Considering recent economic challenges, it’s time for insurance businesses to rethink their traditional approaches and adopt technologies to help them thrive in the new normal.
And Blockchain is one of those technologies.
Studies indicate that 42% of customers do not trust their insurers. This can restrict your growth, and you can even start losing customers. Blockchain in insurance has transformed the value chain for most businesses and helped them build a trusting environment.
Today the competition in the space is rising as Insurtech companies are gathering data, gaining insights, and developing more tailored solutions. To beat this rising competition, you should create an outcome-driven strategy that enhances your current capabilities and drives innovation.
So how do you go about it? Connect with us and share all your pain points, and let us help you do the rest.
At ATC, we have helped many financial and insurance companies evolve their platform and integrate blockchain into the cloud. Having an experienced team, we will understand your pain points and ensure that your data is safe and secure. Leverage our industry expertise to transform your insurance business today.