Blockchain is primarily a record or ledger of preferably digital events and
Blockchain further helps reduce administrative expenses through automated verification of claims and payments’ data from third parties. Insurtech companies can quickly view past claims transactions logged and registered on Blockchain for easy reference.
Pain points of traditional insurance system
The present-day insurance system has many weaklings and pain
- Not very efficient exchange of data and information
- Limited accuracy
- Susceptible to fraud
- Intricate liability of assessment for reinvestment.
- Indulgence of middlemen
- Fragmented data and resources
- Review and processing of all claims
Technologies are rapidly changing every aspect of our life, including how we live, work and engage. Insurtech is having a similar impact on the insurance industry of the world all over. When supported by a conducive ecosystem,
The cryptocurrency like Bitcoin has become very popular and is used as a digital currency by a majority of people since its inception. The potential it is said to have — to completely override the conventional roles of centralized instances — has by now been applied to a number of projects across a huge range of industries including the insurtech industry.
As we understand Blockchain technology, its effects and its potential are now very clear to us. The most important advantages briefly summarised:
Its decentralized consensus-based structure guarantees all participants in a Blockchain high integrity of data from the moment it is stored. Changes and deletions are not possible without another consensus. This creates trust based on a technological protocol rather than through a middleman.
The high integrity of a Blockchain enables shared and reliable data storage across multiple parties. This leads to the omission of isolated silos as well as the storage and synchronization of redundant data which are required for those.
Middlemen and the synchronization of data between different silos mean a cost-intensive work effort. By removing middlemen and manual processes, a lot of these costs can be saved.
While a middleman’s database
Blockchain technology deliberately sacrifices computing power and thus transaction volume in order to enable a decentralized, protocol-based data integrity in the first place. This is also reflected in its enormous energy consumption which is rooted in the elaborate cryptographic algorithms that ensure the integrity of the Blockchain. Now that the technological foundation has been laid new ways must be found which will increase the performance without jeopardizing the integrity gained so far.
Like any young technology, Blockchain is not yet free of risks and there are still some key challenges to overcome. In spite of a few shortfalls Blockchain has revolutionized the insurance sector.