Increasing Role of Blockchain in the Insurance Sector
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.