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Are you aware of the challenges which the insurance companies facing these days? Well, it is the internal procedures which are becoming the hurdle in the path of business operation. These internal procedures are really very complicated and involve different department and also customers.Blockchain has the potential to deliver substantial value to any financial service.
Blockchain not only offers the promise of cost reduction and efficiency, but it also enables the revenue growth, as insurers are attracting new business with better quality service.
A Blockchain technology always helps a wholesale insurance sector to fulfill its role to underpin the global economy more effectively. Now the time has come for the insurance industry to work actively with start-ups, regulators and industry experts that figure out the best ways for navigating Blockchain's potential challenges to the realities of an insurance industry. Insurance companies must begin testing new ways, so as to utilize Blockchain with the internal process to gain learning to grip as the technology matures.
The blockchain acts as a sales ledger. This is more than a buzzword. A Blockchain has a wide-reaching implication, that will definitely impact the insurance industry and also many other business sectors. A Blockchain is a distributed and peer-to-peer, ledger of records, blocks which are virtually incorruptible. Each and every block has a link to the previous block having a time and date stamp. Self-managed, it doesn't require any intermediary co-ordination.
How will an insurance industry be benefitted with Blockchain?
As Blockchain has enabled the recording of electronic cash, it can easily enable the innovative and disruptive changes, to any insurance business model. Blockchain technology can influence a number of things:
· Minimises the need for paperwork
· Develop a system, where we can verify some claims and handle it faster
· Reduces the chances of fraud
· Improves the data quality, used at the time of underwriting
· Improves efficiency, across any insurance value chain
Helps to understand the so-called “smart contract”:
Any insurance business deals with a good number of process that involves an insurance contract.This can be of anything, be it rating a client, deciding a premium to paying a valid claim, and also investigating a fraudulent one.It has been speculated by the industry insiders, that the blockchain technology is sure to bring a new wake and will change the way the insurers are dealing with a client.It also alters the insurer value proposition and the business operations completely.
Many insurance industry's transformations are going to rely on data, and a blockchain may easily end up thus enabling all or most of the data transactions for an insurer through a so-called smart contract. A smart contract easily facilitates, execute and also enforce the negotiation or the performance of an agreement, with the use of Blockchain. This is an automated process, and it can be a substitute for the legal contract.
As the contract is digitally enabled, it also helps improve the efficiency level, in the insurance value chain, wherever we need to spend time, effort, or money, to confirm information before we process the transaction. An insurance contract is basically complex and difficult to understand. This is due to the complex legal language. An industry, which faces, consumer-friendly regulation like Treating Customers Fairly, smart contracts can easily lead to the management claims in a transparent and also responsive way. For example, it is easy to record the insurance contracts and claims onto a blockchain and also validate it by an approved party, which ensures that only valid claims are to be paid.
Blockchain is trustworthy: A crisis of trust always exists in the financial services industry. The large banks are basically the focal points, but the erosion of trust impacts all business. The factors like lack of trust, high costs, and also the inefficiency of the insurance industry play a part in case of extraordinarily high levels of underinsurance. Blockchain because of its transparency is most trust-worthy for the consumers.