I have elaborated in the first piece of these series of posts, how insurance sector has been functioning in a legacy system. I outlined the various problems that have cropped up over time owing to the set process imbibed into the insurance sector, over a period of time. Majority of these problems are prevalent due to the Data discrepancy and bad data capture. These issues many a times affect the insurance sector on the compliance front and also lead to losses that amounts to 1-2% of the total revenue. Mere monitoring of these issues at times might prove out to be costy. Hence I was exploring into ways Blockchain can cut into insurance sector and increase efficiency. We have already dealt about Fraud Detection and Risk prevention in the previous post. Let’s look into further issues that are potentially dangerous and can be resolved using blockchain:
Claims prevention and management:
While big data, mobile and cloud based models are already being employed to store and process claims data, it becomes inadvertently important to make the system transparent. In the processing of Claims prevention itself, new data streams can enhance the risk selection process by utilizing local and external risk and coupling it by analytics. Under such cases, a distributed ledger can help both the insurers, customers and other parties to instantly access the updated relevant information. The use of data stream from mobile phones or sensors can adjust the claims submission, reduce loss adjuster cost and increase customer satisfaction.
In the same fashion, the combination of sensor, satellite, imagery, mobile technologies and blockchain could facilitate claims payments and rescue services when natural disasters occur.
Internet of Things (IoT) and Product Development:
The actuarial analytics are actually dependent heavily on the data presented by technological set ups. As more devices and objects are connected owing to the data packs available, a lot of data will be collected and stored over a period of time. This data will be valuable to insurers as they would seek support for their models with updated data from time to time. Hence blockchain comes into play for managing these volumes of data independently and facilitates its availability for all the parties involved.
Hence we can see in the above cases that Blockchain can actually become the backbone of insurance sector. Follow this space for the next and the final part on how blockchain can power insurance.