A smaller arm in the financial trade using blockchain is the insurance area. Insurances have been running for hundreds of years and have adapted to all technological advances throughout. By using blockchain technology, companies can save a lot of time and money on analyzing and assessing certain benchmarks used in insurance decision-making. Not only can market data be fed into the system, but also cost analyses, risk assessment and other costs/benefits can all be written on the blockchain and thus be assessed in a decentralized manner. It must be noted that there must and will always be a human aspect when making the final decisions; however, countless hours of assessing can be saved by using blockchain.
Smart contracts in insurance can:
Save time and money in the assessment
Create a safe risk management system
Streamlining routine interaction with transparent triggers and immutable history
Help in fraud detection and prevention through the immutable nature of blockchain
Create a fully automated claim management system
Manage health data and give authorized individuals direct access to medical data when necessary
We are going to have evaluated two major branches in this article:
Existing insurers and companies around the world are moving their product to the blockchain.
New up-and-coming insurance companies creating products designed specifically for blockchain with fresh new approaches to the implementation of insurance.
Old Companies and New Approaches
Deloitte has been a prominent insurance provider recently exploring a shift towards decentralization for two key areas: Center for Health Solutions and Center for Financial Services. They have 6 goals in mind to solve certain issues they are experiencing with the present-day administration and documentation:
Trust between entities and their health records
Automatically recording records and linking data to act on by contracts
Detecting fraud more effectively
Improving provider directory accuracy
Making a more client-centric application, where data is easier to input and store in a secured & decentralized manner for future use.
Improving dynamics between insurer and clients, letting smart contracts handle improvements in lifestyle and changes adapted to each ‘file on the chain’. This business transformation to blockchain will achieve higher efficiency and will produce enormous cost savings according to Deloitte, which is very true.
McKinsey is another major company adjusting and positioning itself towards blockchain integration. McKinsey pictures the insurance branch to be behind the banking world in terms of adopting new technology and explains the benefits it could reap. In addition to Deloitte, McKinsey pictures the adaptation to be of great benefit to reach emerging markets as well. You can read the whole document HERE.
IBM also has a document to download with a view on Insurance on the Blockchain, HERE.
New Blockchain-only Companies are Jumping into the Market
The transformation has also triggered new companies to fill the voids left by the old, existing systems and establish themselves using new blockchain technology. A trending company is Bridge Mutual, providing coverage for Smart Contracts, Stable coins, exchanges, and More. It’s using cross-insurance between blockchain companies and offers a voting system for holders to decide together, with a model, if the insurance is to be issued towards claims. Using this novel method, even the most ‘challenging’ claims will be processed within 6 weeks, offering exceptional speed with help of smart contracts. Furthermore, another feature that is valued in the online industry is the fact that they don’t require KYC. Etherisc and B3i are also companies to possibly keep an eye on. The first one is an open-source development platform that provides the tools for other insurers to utilize and produce their own products. They also created their own platform to insure people for losses if their personal crypto wallets are hacked or stolen. B3i was a small company founded in 2016 which attracted major existing insurers to work with them in this space, providing solutions and knowledge. They soon started working with 38 existing insurers to help them with smart contracts for property insurance. The insurance industry still has a long way to go but is truly aware of the benefits new blockchain technology has to offer. In 2021, many companies are actively exploring or already starting to use it in their favor. We are now at this initial stages for a whole new industry to embrace this emerging technology and develop a completely new area in Defi of ‘Insurance on the blockchain