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Innovating Insurance through Blockchain

2 months ago by Luigi Muscat Filletti
Blockchain

As technology continues to develop the financial sectors of the world, the insurance industry is also starting to take a look at implementing digital innovation to revolutionise their operations and generate a more customer-focused experience. The technological impacts to the insurance industry are addressing concerns on fraud and cybersecurity whilst providing customers with tailor-made insurance dependent on the customer’s wants and needs.

The online and mobile-based generations of today are demanding a faster, more simple means of completing tasks consisting of completing financial transactions online, and with a handful of innovative insurance agencies paving the way forward in this industry, it is expected that technology will continue to aid agents and brokers in their quest to understand, approach and provide valuable insurance solutions to current and potential customers.

'Now, with the introduction of Blockchain technology taking centre stage across the Banking and Finance sectors of Malta, this constantly evolving technology will continue to disrupt branches of Finance, such as Insurance.'

The importance for organisations and individuals looking for careers in banking and finance to stay competitive and relevant is becoming more and more challenging today. The new distribution channels now available in the digital age for insurance agents and brokers are those of online, social media and SAAS (Software-as-a-Service), and can be used as tools to accelerate customers acquisition and retention, all while building their brand in the process. Taking into consideration the on-the-go internet browsing culture of our generation, insurance agencies should generate effective strategies towards analysing and understanding customer behaviour online. Now, with the introduction of Blockchain technology taking centre stage across the Banking and Finance sectors of Malta, this constantly evolving technology will continue to disrupt branches of Finance, such as Insurance.

'Adopting Blockchain technology in Insurance so far means that an organisation will be investing in not only optimised efficiencies, but also fraud prevention, customer trust and loyalty.'

Still in the early moments of Blockchain exploration and implementation in Insurance, it can be said that quite a number of positive impacts can be made through this technology. This means that organisations in this industry should eventually work alongside Blockchain experts to be able to develop their internal processes and progress during this innovational time. Adopting Blockchain technology in Insurance so far means that an organisation will be investing in not only optimised efficiencies, but also fraud prevention, customer trust and loyalty. The issue on developing a practical and straightforward customer experience should always be the main focal point for an organisation in the financial sector, even more so now in Insurance. Like in banking, Blockchain is promising to enhance the user experience through digital platforms when applying for insurance-related services. However, unlike banking, an insurance agency would need to store data relevant not only to the customers’ financial status, however also to other areas such as home, health, education, occupation, travel, personal valuables and more. The insurance industry can therefore be more complex in this regard, as official documentations and reports would need to be presented by the customer. Blockchain technology promises to add stability and transparency to the services promoted by insurance agencies, and so a list of expected benefits can be formed.

First and foremost, Blockchain technology makes use of a public ledger wherein all transactions are processed and individually recorded in a decentralised manner, meaning there would be no issues on fraud. With actions of manual entry omitted through the digital process, human error will be prevented. Additionally, a customer’s documents can be digitised and validated instantly, thus speeding up the process and recording all important information within the organisation’s customer database through a distributed registration system. Issues on customer data privacy can also be addressed through Blockchain technology. As of present, organisations in various industries might run the risk of having their customer data exposed to third party organisations. Blockchain encrypts such data which is not present within a central location on the system either, so with anonymity maintained, cybersecurity can be well-improved. All data would therefore only be accessible to the elect parties involved as a method to provide historical records and evidence.

'The customer experience can be enhanced by introducing smart contracts and electronic signature to verify claims and issue automatic payouts.'

Excellent data management is an essential factor for insurance organisations, and Blockchain technology can simplify the collection and recording of necessary data. Through Blockchain, a customer’s data can be thus be interconnected and easily extracted. Further to this, a challenge posed on insurance companies is that of struggling with fraud, whilst customers face daunting tasks of filling in lengthy forms and reading through excessive terms and conditions. This can all be made easier to handle thanks to Blockchain, as the customer experience can be enhanced by introducing smart contracts and electronic signature to verify claims and issue automatic payouts. Additionally, claims can be verified on the Blockchain once a set of criteria is satisfied, triggering fair payment without the need of any human intervention. With IoT in Fintech evolving rapidly too, the insurance industry is set to follow suit with regards car insurance, as IoT is being introduced in vehicle design concepts to sync to the database of the user’s insurance agency of choice, providing data related to speed, ticketing and road accidents to monitor the user’s behaviour behind the wheel. Home insurance can also be positively impacted, as home security can be synced to the insurance agency to provide proof of evidence.

Therefore, the speed and simplification of such processes in the insurance industry would be significantly improved through Blockchain technology. Recruitment opportunities will also become plentiful, as software developer careers will have greater options as Tech will continue to delve into Insurance, thus the growth and demand for talent in this industry would be set to increase. Blockchain developers and professionals in AI, Cloud Computing and Cybersecurity, to name but a few, would be needed to facilitate all digital processes to ensure a seamless transition. The role of the insurance agent and broker will be to implement this technological shift to provide a more customer-centric approach, making it important to adapt to progress.