Insurance fraud is as old as Insurance itself. In this day and age, insurance fraud is costing the industry millions annually, not because of the swindling but in terms of the resources spent in discovering and stopping fraud at its early incursions.
While Blockchain’s benefit for the insurance industry has been touted at reduced costs and simplification of processes thanks to optimal automation, one of Blockchain’s key benefit is its ability to stop insurance fraud upon the first sign through an algorithm that pulls data hedges to determine anomalous data that are otherwise not present in the current registry of records.
Blockchain for Insurance is a culmination of several nascent technologies that are maturing quickly. For instance, Blockchain is not a standalone system and it relies on the close integration of technologies such as governance algorithms, distributed ledgers, decentralized applications, voting systems and embedded smart contracts.
This gives Blockchain the status as a convergent platform that can service high-value assets such as the insurance industry. With Blockchain, the insurance process from expenses, salaries, premiums and claims more efficiently – and in turn, the cost to get insured gets cheaper.
Insurance and Value Tracking
Anything that is of high value with the market is insurable. When it can be covered by insurance, Blockchain can augment the process of assigning value, maintaining value and tracking value as it progresses across distribution channels.
When we assign a value to an object, we can create a registry within the Blockchain that identifies as a registered code that is immutable, distributed, and hence trustworthy. Through the registry, the item in value can be verified by an authority and its authenticity is assured. This is useful when a transaction is happening where buyers are assured that the item of value is indeed the valuable item they are procuring from a verified merchant.
Insurance companies process hundreds, if not thousands of insurance applications and claims per day, if not for the thousands. The process of being insured or claiming an insurance is still highly dependent on costly variables such as actor dependencies, cumbersome paperwork and time gaps in between validation and collaborative responses.
Now if we weight the volume based on the sheer amount of processes involved in getting people to be insured or delivering the policy, the cost will be staggering and this does not account to the “invisible cost” inherent in the current processes of insurance.
The gaps between time in waiting for correspondence, actor fulfillment and information verification are costing insurance companies more than what they realize.
With Blockchain, massive efficiencies and savings can happen by optimizing the processes via simplicity. The sheer overhaul of the process in terms of streamlining via optimization has its weight on cost-savings that is unprecedented and insurance companies have just scratched the surface.
Aside from cost-savings and optimal processes, the client experience of the claims processes is to be transformed as well. Today, the claims process is a tedious and cumbersome experience where customers are not eager to dive through the painstaking process of paperwork and the back-and-forth between insurers.
Through Smart Contracts, the process of enrollment, storage, enactment and policy claim is transformed into a self-executing agreement that notifies all parties when policy conditions are met to start the fulfillment process.
Blockchain is more than just a nascent technology for insurance. Blockchain is a transformative and disruptive technology that will soon deal a new kind of standard for insurance. Companies must invest in knowledge, resource and internal focus on the process to see how Blockchain can transmute the old into the new optimized model of operations.
DynaQuest Technology Services is an Insurance Technology provider that specializes in outsourcing and procurement of solutions for insurance companies. With our Blockchain suite of consultation, accelerator and maintenance, we help insurance companies transition into Blockchain.
DynaQuest Technology Services
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