In the business world and beyond, blockchain is a hot topic. While many of us have heard the word before, most are not familiar with what exactly it is. Essentially, a blockchain is a transparent, yet secure, recordkeeping system. It ensures secure exchanges of information between parties by encrypting information and preventing it from being erased or modified. Typically, technology like Blockchain is used to record transactions made via cryptocurrency, but it has several other applications.
Who Uses Blockchain?
Blockchain is more useful to large organizations, rather than small or medium-sized businesses. Insurance companies, banks, hospitals, governments, and any other organization with large amounts of data that needs to be moved and shared can benefit from using blockchain. That said, there are different types of blockchains in use, each appropriate for a different type of business. Open or public blockchains can be used by governments, nonprofits, or any other organization where information is available to the public. Closed blockchains are private, only available to invited users. Unlike the internet, there is not one universal blockchain.
How is Blockchain Technology Being Implemented in Insurance?
According to the Accenture Technology Vision 2019 Survery, more than 80% of insurance companies claimed they adopted or are planning to adopt blockchain technology. For several years, insurance organizations have been experimenting with blockchain. Some companies are using the technology to innovate and meet the ever-evolving consumer demands, while others are sticking to the basics and making the insurance process easier for customers and carriers.
Tokyo Marine, a Japanese P&C insurer, tested blockchain for marine cargo insurance certificates and reported that the amount of time it took for a shipper to receive an insurance certificate dropped by 85 percent. Allianz used blockchain and smart contracts to simplify their processes and accelerate the contract management process for cat swaps and bonds.
And these companies are not the only ones who see the potential of blockchain. While many blockchain insurance projects are still in the concept stage, companies are choosing to collaborate and form alliances such as the Blockchain Industry Initiative (B3i) or the Institutes’ RiskStream Collaborative.
Benefits of Blockchain to the Insurance Industry
“With blockchain, data reconciliation is easier, accuracy is improved, and time spent uncovering information is eliminated, allowing for transparency, efficiency gains and cost reductions throughout a value chain,” says Accenture. The improvements in speed, security, and accuracy ultimately create better customer experiences. Blockchain helps to meet customers’ demand for efficiency and safety and help insurers to process claims faster. It is a break from outdated traditions, and it is only the beginning. Blockchain technologies are in their infancy, and as more blockchain-based applications are developed, the insurance industry tech ecosystem will expand and improve.