Corporate Finance News

Lundi 22 Octobre 2018

How Blockchain Could Disrupt Insurance

Insurance has been around for centuries. As early as a thousand years ago, Chinese merchant seafarers were pooling together their wares in collective funds that would help pay for the damages of any individual’s capsized ship.

While technology has permanently changed entire industries wholesale over the past decade, the multi-trillion-dollar global insurance industry in many ways, is still stuck in the past.

Despite the rise of online brokers, many consumers still call insurance brokers by phone to purchase new policies. Policies themselves are often processed on paper contracts, which means claims and payments are error-prone and often require human supervision. Compounding this is the inherent complexity of insurance, which involves consumers, brokers, insurers and reinsurers, as well as insurance’s main product — risk.

Each step in this collaborative process represents a potential point of failure in the overall system, where information can be lost, policies misinterpreted, and settlement times lengthened.

Enter blockchain technology, a cryptographically secured form of shared record-keeping.

While the blockchain has been subject to extreme hype, its true killer applications are likely to be in some of the most antiquated fields out there. And it has the capability to be a transformative force for industries like insurance, which requires the coordination and cooperation of many different intermediaries with different incentives.

Of course, getting there will be no mean feat. Insurance companies and startups working with blockchain technology will have to overcome significant regulatory and legal hurdles before we see anything resembling industry-wide disruption. Skeptics point out that there are serious obstacles for blockchain technology in an industry that hasn’t even fully embraced the cloud.

It’s too early to tell whether blockchain can overcome the legal and regulatory hurdles to become a default standard in the insurance industry. But the possibilities are endless, and insurance companies and startups alike are exploring insurance applications for the blockchain full-throttle.

These include:

- Fraud detection and risk prevention: By moving insurance claims onto an immutable ledger, blockchain can help eliminate common sources of fraud in the insurance industry.
- Property & casualty (P&C) insurance: A shared ledger and insurance policies executed through smart contracts can bring an order of magnitude improvement in efficiency to property and casualty insurance.
- Health insurance: Through the blockchain, medical records can be cryptographically secured and shared between health providers, increasing interoperability in the health insurance ecosystem.
- Reinsurance: By securing reinsurance contracts on the blockchain through smart contracts, the blockchain can simplify the flow of information and payments between insurers and reinsurers.

Read on for a deep dive into how blockchain is disrupting the insurance industry.


See how insurance giants and startups alike are attempting to use blockchain solutions to prevent insurance fraud, digitally track medical records, and more.

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