The insurance industry can benefit from the use of Blockchain in a variety of ways. It could revolutionize the way that consumers sign up for a policy, pay premiums, or manage a claim.
Risk Prevention and Fraud Detection
Insurance fraud is a significant issue for the industry. Rooting out illegitimate claims while reducing risks creates the potential for lower prices and better profits.
95% of insurance providers are already using anti-fraud technologies of some type. Despite this effort, the global industry loses up to $80 billion per year because of illegitimate claims.
Blockchain provides a higher level of transparency with its distributed ledger. There is no way to modify information once it is written, providing better data security. By gathering public data, it would become easier to improve recognition of fraudulent patterns that can cover the entire network without compromising individual security.
Claims Management and Prevention
Insurers need time to gather the information necessary to decide on a claim. Depending on the severity of the issue, time delays could create problems for some customers. There are coordination issues to consider as well since photographs, police reports, and other information items need a review before a resolution becomes possible.
Blockchain enables insurance providers to create a transparent claims model where third-party data can be placed into the network independently. This process reduces the need for multiple groups or individuals to handle the information before it gets to the claims’ representative.
Property and Casualty Framework
About half of the insurance industry involves property and casualty needs. Almost everyone uses a policy in this area.
That means there are significant data entry issues to manage. Claim processing often goes through manual methods of approval. Blockchain technologies, such as smart contracts, could help to automate this segment to ensure decisions are more predictable.
Customers would benefit from a reduction in paperwork if smart contracts became the industry standard as well. Although each new policy or changes to an existing one would require a brand-new agreement, the benefits of automation would still offset this one added time commitment.
Health Insurance Benefits of Blockchain
Even with the upgrade to electronic health records, the health insurance struggles to manage significant levels of paperwork. Medical providers may use multiple accounts for a single patient with numerous billing codes for each service offered. Managing all of that data takes a lot of time.
Blockchain would allow providers to place all of this data into a single block. Then the insurance provider could review this data to ensure its accuracy and provide funding based on the complete service instead of process individual codes one-by-one.
Patient information from different medical providers could go into each block as well to provide accurate data about a person’s health and wellbeing to ensure an accurate diagnosis occurs.
This process would create higher levels of patient satisfaction while it simplifies the billing processes that exist, especially in the United States.
The use cases for Blockchain in the insurance industry can ensure better compliance, improve data transparency, and reduce the need for administrative support. Although it will not solve the problems that rigid privacy laws create, it is a step in the right direction.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.