Four Effective Use Cases of Blockchain in the Insurance Industry

Blockchain enables consumers (insurers) to handle vast and complex networks on a peer-to-peer basis and provides a decentralized data storage and processing network

Fremont, CA: Blockchain provides an independently verifiable data collection such that insurers, as well as consumers, do not need to be impacted by decisions based on inadequate or incomplete information. In travel insurance, blockchain systems use external data sources to verify whether a flight has been delayed or canceled. Insurers can, therefore, settle on the processing of refund claims. Blockchain can manage even more complicated cases of road accidents by reliably defining the car or human fault.

Here are four blockchain use-cases in the insurance industry are-

Microinsurance

Instead of an all-encompassing insurance scheme, microinsurance protects against particular risks with monthly premium payments that are considerably less than regular insurance. Microinsurance policies generate profits only if they are delivered in large quantities. However, due to low-profit margins and high delivery cost, micro-insurance schemes do not have the merits despite immediate benefits.

Reinsurance

Reinsurance is insurance for insurance companies. It covers insurers when large amounts of claims are made. The current reinsurance mechanism is highly inefficient due to information silos and lengthy procedures. Blockchain will offer double benefits to reinsurers, unbroken records for reliable claims processing, and speed up the process by automated data/information sharing.

IoT & Blockchain together to structure data

As IoT connects more and more devices, each device’s amount of data would increase significantly. These data are beneficial for insurers to build reliable actuarial models and use-based insurance models. In the car insurance industry, data collected on driving time, distances, acceleration, break trends, and other behavioral statistics can be used to classify high-risk drivers.

Blockchain enables consumers (insurers) to handle vast and complex networks on a peer-to-peer basis. Instead of building costly data centers, blockchain provides a decentralized data storage and processing network.

Fraud Detection

Blockchain guarantees that all transactions executed are permanent and timed. This means no one, even insurers, can change the data that prevents certain breaches. These data can also help identify patterns of fraudulent transactions that insurers can use in their fraud detection algorithms.