It is estimated that roughly one-third of blockchain use cases are in the insurance industry. Here are the leading examples.
Blockchain and smart contracts have enabled the development of new approaches in the insurance industry, as they begin to replace outdated business models (with excessive paperwork, communication problems, multiple data operating systems and duplication of processes and the inability of syndicates to mine their data). By digitizing payments and assets—thus eliminating tedious paperwork—and facilitating the management of contracts, blockchain and smart contracts can help cut operational costs and improve efficiency. Smart contracts also allow for automation of insurance claims and other processes as well as privacy, security and transparency. It is estimated that roughly one-third of blockchain use cases are in the insurance industry.
How Blockchain Is Used in Insurance
How will blockchain and smart contracts transform the insurance industry?
- Quick and efficient processing and verification of claims, automatic payments—all in a modular fashion, thus minimizing paperwork.
- Transparency, minimizing fraud, secure and decentralized transactions, reliable tracking of asset provenance and improving the quality of data used in underwriting. Besides improving efficiency, this also reduces counterparty risks, ensuring trust and safety both from the insurer’s and customer’s perspective. By computing at a network, rather than individual, company level, the consumer is reassured that the process was completed appropriately and as agreed upon. From the perspective of the insurance company, this fosters trust, as well, and encourages consistency, as the blockchain provides transparent and permanent information about the transactions.
The insurance industry has traditionally been associated with tedious administration, paperwork and mistrust; the incorporation of blockchain, however, has the ability to transform this image by bringing operational efficiency, security, and transparency. The long-term strategic benefits of blockchain are thus clear.
Top insurance blockchain projects:
AIG (American International Group) – Smart contract insurance policies
HQ: New York
Description: AIG, in conjunction with IBM, has developed a “smart” insurance policy utilizing blockchain to manage complex international coverage.
Blockchain network: Bitcoin
Deployment: In June 2017, AIG and IBM announced the successful completion of their “smart contract” multinational policy pilot for Standard Chartered Bank. It is said to be the first such policy to employ the blockchain digital ledger technology.
Fidentiax – Marketplace for tradable insurance policies
Description: As “the world’s first marketplace for tradable insurance policies,” Fidentiax hopes to establish a trading marketplace and repository of insurance policies for the masses through the use of blockchain technology.
Blockchain network: Ethereum
Deployment: Fidentiax succeeded in raising funds for the project through its Crowd Token Contribution (CTC, aka ICO) in December 2017.