Carriers in the blockchain ecosystem provided by HashCash Consultants gain a competitive edge by attaining timely insights from encrypted data in a cost-effective manner.
The Insurance Industry, having to deal with millions of claims also struggle to meet ends when a plethora of data redundancy and false claims jeopardize its smooth function. Sieving through duplicate data to reach the most important ones, remains a time-consuming process that delays payments and opens channels for human error. Besides, always having to check record history manually also hampers the workflow of the insurer.
To mitigate such challenges, the Insurance Industry is already leveraging Blockchain technology, which uses its DLT or Distributed Ledger Technology to inject transparency and trust within the Insurance framework. Linked using cryptography, Blockchain is a growing list of transactional records which are stored with a timestamp for each transaction. Decentralized in nature, the data on the Blockchain network is immutable, meaning it cannot be tampered with. Here discussed, are some of the aspects of Blockchain Technology which would elevate the efficiency of the Insurance Industry.
Smart Contracts facilitate smooth functioning in the Insurance Industry, which is seeing a rise in personalized contracts. Smart Contracts let the Insurance Company save a ton of money and time while enriching the customer experience. Smart Contracts creates a flawless connection between real-time information from multiple systems that involve physical documents. It obligatory triggers processes like reimbursements, claims, and payments with high accuracy.
Blockchain and Big data
Insurance companies are exposed to a lot of data that are a direct cause of many devices which generate numerous customer information every day. To sort through the data is a real challenge for policy managers. Large amounts of data, on the other hand, can be monetized, managed or shared through Blockchain. The Blockchain is able to store data without a central authority controlling it. Besides, it can also store static records that can be viewed by all the parties involved. Using a date and time stamp, Blockchain creates a digital fingerprint that lends both transparency and security to the streamlined data.
Blockchain Provides Security
Blockchain technology would eliminate duplicate transactions and suspicious transaction initiations by the use of the public ledger, which logs in each transaction. The decentralized digital repository that Blockchain boasts helps to verify the authenticity of policies, customers, and transactions by validating data with a database of historical records. This constant data validation prevents hackers from corrupting and stealing files.
Handling Third Party Transaction
Blockchain mainly helps to reduce the cost of administration through the automated verification process. It can automatically validate and verify payments and claims from the third parties, which are made through digital devices. This process enables the Insurance Company to quickly have a glance at the past transaction records and claims payments. By having an explicit reference of past transactions, it is easier for the insurer and customer to be tied by a relationship of trust and transparency.
Blockchain provides accurate reserve calculations depending on currency contracts, which can significantly uplift the framework of the reinsurance world. Presenting an array of benefits for property and casualty insurers, it keeps the insurers updated about the availability of money. Rebalancing the exposure against specific risks is mandatory which is reinforced by Blockchain to restore confidence within the Insurance Industry.
Insurance Companies such as Zurich, Munich Re, Aegon, Allianz, and Swiss Re have already started investing in Blockchain to yield the benefits through the B3i initiative. Blockchain technology lets the Insurance Industry indulge in better service for clients that are presented in a faster, more accurate and transparent manner.
Malta’s ascension to EU in 2004 attracted a number of insurance and reinsurance companies to the jurisdiction which mainly services the European market. Blockchain company HashCash Consultants will be collaborating with a leading Life Insurance company to bring their operations to a blockchain network.
Industry overview in Malta
The Distributed Ledger Technology or DLT has made significant advancements across industries, and Malta has welcomed the change in most sectors. The world’s first blockchain nation will also see this innovation play a bigger role in its insurance market. The Insurance sector, as of 2015, reported of fifty-eight insurance undertakings. Forty-two of these undertakings were authorized for general business, two composite, seven long-term businesses, and another seven reinsurance firms. The same year also saw a 33.6% increase in gross written premium to €3.78 billion from €2.83 billion in 2014.
Two years after Solvency II brought about landmark regulatory changes, the insurance industry is undergoing another year of reformation in 2018. The Insurance Distribution Directive (IDD) and the General Data Protection Regulation (GDPR) are incorporating new-age technology to refashion insurance distribution in Malta and the EU.
Blockchain in Insurance
A blockchain network provides a transparent ecosystem for collaboration between multiple companies to optimize sharing of relevant records essential to all parties and streamline claims recovery. The blockchain ledger is decentralized, distributed, and operates on a consensus mechanism that reprises every member or node in the network of any alteration in records. Its shared ledger capabilities can help insurers agree on claims, build trust that evidence is being shared and improve the overall customer experience.
Another central feature to blockchain is smart contracts, and it radically changes how the insurance payout process pans out. It would minimize insurer costs and claims administration costs. Policyholders could subsequently receive savings in lower premiums from insurers, or go a step further and have the option of choosing a refined insurance cover for smaller events. Under the traditional system, it would be impractical to initiate a manual claim process for those.
Smart contracts would enable automatic policy adjustments as a response to pre-determined events or information. Such a system would expedite claims payments, giving policy owners their rightful money in much less time than its alternative which normally takes a week.
HashCash in Insurance
HashCash provides HC NET Blockchain which can be used by insurance companies to convert multiple policies into smart contracts. This would produce a single, consolidated view of policy data and documentation in real-time. The insurers will be able to furnish visibility into coverage and premium payments, and update network participants with automated notifications following payment events.
HC NET Blockchain can be the vital link across a vast ecosystem of third-party administrators and service provider networks. Being decentralized, the inherent transparency of the digital ledger optimizes claims processing by reducing the scope of errors by insurers. Better provider management and lower operational expense would be a natural consequence of this.
The blockchain solution offered by HashCash ensures contract certainty and enhances risk-handling capabilities, fraud detection, and risk prevention.
About HashCash Consultants
HashCash Consultants started as a Blockchain Consulting Company in California. Today, HashCash products enable enterprises to move assets and settle payments across borders in real-time using HashCash Blockchain network, HC NET. Financial Institutions use HC NET for Retail Remittances, Corporate Payments, Trade Finance, and Payment Processing. HashCash also runs the US-based cryptocurrency exchange, PayBito and the leading Cryptocurrency payment processor, BillBitcoins. HashCash offers cryptocurrency exchange and payment processor white label solutions, comprehensive ICO services and customized use case design and development. HashCash propels advancement in the field of blockchain through the Blockchain1o1 program and its investment arm Satoshi Angels.
Political situations are a constant in a company’s life, as are technological innovations. Sometimes political upheavals change the shape of the world, consider the Arab Spring, or Brexit, for example. In order to survive, companies have to intelligently operate through rapid reversal of fortunes and the more ambitious ones are actively looking for ways to master them in order to survive. However, enterprises can actually enter markets with insurance against political risks, especially in regions with a high density of untapped population. Since the very process of verification of documents and subsequent insurance payouts can be complicated and time-consuming, technological innovations such as blockchain are playing an increasingly big part in simplifying matters.
Implications of Political Risk to Companies
It is not just companies that have operations in regions of conflict which are affected by adverse political situations. Sometimes the ruling political party in a stable democracy publicly criticizes certain companies leading to the drop in stock price of that firm. Wars impact the firm value as well, especially of a company related to the defense sector, or are perhaps in the travel and tourism company.
Even something less dramatic than wars and terrorist attacks can pose a risk to companies, such a rise in tax, or a political sanction that bars commercial ties with certain nations.
How can Insurance Companies Measure Political Risks?
It can be measured on a macro or a micro basis. Micro looks at the risk of a company going abroad, and macro looks at how risky the country is. One can refer to country risk indexes to understand that and go through the business risk environment index. The Wall Street Journal, for example, collaborates with the Heritage Foundation to come out with “the index of economic freedom” every year. It gives a fair idea of how free a country’s trade is, how frequently regimes are changed, and the rate of inflation, among other metrics.
How can Companies Protect themselves in the face of Political Unrest, and how could this have an Impact on Emerging Markets nearby?
A lot of people are interested in political risk particularly these days in view of situations in east Europe and the Middle East. One type of political risk mitigation is an insurance that is offered by banking intuitions. Take for example the Multilateral Investment Guarantee Agency (MIGA), an initiative by the World Bank in Washington. It has reported a marked increase in request for investments that have been made or are about to be made in Ukraine and countries nearby. Investors in these countries are concerned about energy supplies which could be at risk as a result of the clash between the Russian Federation and Ukraine.
The types of risk that could be covered by insurance are expropriation, war, civil disturbance and terrorism, currency inconvertibility and transfer restriction, or even breach of contract between companies and government ministries.
Companies that can seek Political Risk Insurance
Banks top the list. Banks make two types of loans among others – one is loans made to ministries to finance emerging markets. These would be covered by a protection pertaining to non-honoring of sovereign financial obligations. The second is banks granting loans directly to companies to finance their projects. Such projects in emerging markets are often funded by commercial banks which can be protected by insurance.
Another category eligible for political risk insurance is manufacturing companies who often build facilities or expand existing facilities. They make investments in equities for that and even take intercompany loans. Other companies could be oil and gas companies, infrastructure companies involved in the water sector, roads, ports, airports, the transportation sector, education, health, even hotels.
Benefits of Blockchain in Insurance
Blockchains are decentralized, distributed ledgers that are revolutionizing the way the insurance industry has worked thus far. Its benefits can be categorized into two divisions:
Its short-medium term benefits include,
i) Automation – Smart contracts would effectively enhance speed, transparency and cost efficiency, especially in the case of parametric insurance products. Smart contracts function of predetermined programmes, and in an insurance structure would enable quick payouts in certain events. The automatic approval of claims also reduces fraud and unnecessary delay.
ii) Distributed databases – Blockchains can improve the insurance infrastructure by minimizing human error and the expenses and delays incumbent to the verification processes. Reconciliation and synchronization of multiple databases economize time.
The Medium – Long-Term Benefits of Blockchain to Insurance are,
i) P2P business models – Blockchain can enable the scalability and transparency of business models like P2P insurance. DLT would provide the necessary framework for organizations that operate of self-regulation and automation – traits that would instill trust in an ecosystem that demands cooperation between non-trusted partners
ii) Risk transparency – Many start-ups are exploring near-real-time adaptive pricing, hybrid insurance products, and on-demand insurance. These companies are also leveraging big data, AI and the IoT. Blockchain would enable the secure storage and sharing of data pouring from these new sources to increase the efficiency of risk assessment and pricing.
Need Political Risk Insurance
If there is anything that takes one by surprise is the sudden and unexpected ways the political situation of a country undergoes radical change. While it is in the interest of insurance companies to keep an eye on the markets in potentially volatile regions, it is more important for the companies in the private sector who are considering investments in those countries to be proactive in inuring themselves. Blockchain companies such as California-based HashCash Consultants are being roped in by insurance firms looking to cut down on operational costs, and to circumvent unnecessary delay in verification procedures. HashCash Consultants provides blockchain solutions that operate on HC NET and ensure transparency, reliability, and cost efficiency to the insurer and the insured.
Enterprises should keep in mind that what is stable today might not be stable tomorrow, and it is crucial for business interests to protect themselves in the event of instabilities or situations where their investments could be at risk.
People need insurance for a variety of reasons people need life insurance, homeowners need flood insurance, auto insurance, medical insurance, and so on. Leading software development company, HashCash Consultants, is set to make the cumbersome operations of the insurance sector significantly effortless with blockchain.
Insurance industry contributes nearly 40% GDP of the financial institutions, making for a crucial part of the financial services sector in the United States. It is also responsible for employing more than 2 million people. The paperwork generated by this industry is massive and involves numerous copies of the same reports to be individually distributed across a wide network. This is one of the primary problem areas that have made blockchain a favored technology for insurance companies.
A blockchain is a decentralized ledger that records economic transactions as well as data of any value. Information held on a blockchain is immutable and exists as a shared and continually reconciled database. The benefits of utilizing a network this way are numerous in the field of insurance, and can be broadly categorized into two divisions:
Short to medium-term benefits (2 – 5 years)
1. Use of automation – Blockchain implements smart contracts, which is especially relevant to processing parametric insurance claims. Since smart contracts are programmed to respond a certain way to a particular set of stimuli, it can be instrumented in disbursing payouts triggered by predetermined conditions.
2. Reduced processing time – Since the data is distributed across nodes in a blockchain network, relevant information is accessible to various players in the market. The blockchain database allows for real-time reconciliation to mitigate the chances of fraud and makes verification of data quick.
3. Provenance tracking of insurable assets – Data stored in a blockchain is immutable, easily accessible and validated by predetermined programmes. This makes tracing the origin of valuable assets such as diamonds easy in value chains.
Medium to long-term benefits (5 -10 years)
1. Development of P2P business models – The transparency, reliability, and scalability a blockchain infrastructure can bring business models like P2P insurance could open up many possibilities for startups.
2. Risk transparency – Blockchain could be used as a decentralized distributed ledger for sharing sources of data for enhanced risk assessment, pricing, and mitigation. Such an archive would be instrumental in developing novel ideas such as real-time adaptive pricing, on-demand insurance, and hybrid insurance products for the sharing economy.
HashCash and Insurance
With HC NET Blockchain, clients can convert multiple policies into smart contracts to give a single, comprehensive view of policy data and documentation, all in real time. The solution by HashCash Consultants presents a clear understanding of coverage and premium payments, delivers automated notifications to network participants following payment events. The blockchain company has developed its product to cover core issues in the industry including fraud detection and risk prevention; false claim prevention and management; distribution and payment models; and, reinsurance.
HashCash has identified the need for trust in a sector dedicated to protect one from the unexpected, and has incorporated a technology best suited to provide it in its products.