6 Uses for Blockchain in Insurance
Blockchain technology is "revolutionary" for a lot of industries, including insurance. That's according to the Blockchain in Insurance: Progress and Plans report from SMA partner Mark Breading, released this month. Breading surveyed insurers on their familiarity with blockchain, and their view of its potential. Following are the top six applications respondents provided:
The emerging peer-to-peer insurance model, where insureds group themselves by particular affinity groups, is the leading blockchain opportunity cited by P&C insurers. Two-thirds of P&C insurers cited it, as well as nearly one in four life and annuity carriers
The on-demand economy and increased customer touchpoints are contributing to insurance product innovation that includes instantaneous underwriting and shorter durations. Sixty-three percent of P&C insurers said that blockchain technology could prove useful in activating or de-activating coverage.
Blockchain originated with the digital currency Bitcoin. Though 63% of P&C and 47% of life insurers said that payments via blockchain are in the future for insurance, Breading wrote that it's unlikely that will manifest with new currencies anytime soon.
This was the runaway winner for life and annuity carriers, with 78% of them citing it as the top application for blockchain. That's because the industry today depends on glacial exchange of since the exchange of illustrations, applications, investment analyses, statements, benefits letters, and other sensitive documents, Breading posits.
If the blockchain is incorporated with other emerging reporting mechanisms, such as the Internet of Things, claims could be nearly instantaneously verified and paid out, Breading says. Right now, this is happening on a more macro level, with some companies testing smart contracts "with specific trigger points in areas such as reinsurance and CAT bonds," he continues.
Finally, as part of the global financial industry, insurers should be prepared to use blockchain technology to participate in financial markets, alongside their banking and investment peers, Breading says.