Blockchain technology could soon disrupt insurance industry
It’s looking like the insurance industry is in for a shake-up.
There’s a growing sense among Fintech experts that blockchain, the technology that rose to prominence by enabling the existence of Bitcoin, could have a disruptive effect on how insurance is conducted. The International Institute of Finance recently called blockchain one of the major technologies that could “spur a fundamental transformation of the insurance industry.”
In an article discussing blockchain’s potential impact on insurance, TechCrunch writers Kevin Wang and Ali Safavi asserted that it “has the power to simplify the claims process, alleviate high premiums, help insurers create niche coverage and, most importantly, benefit those who live in catastrophe regions.”
Much of this could be accomplished with the help of blockchain’s ability to support smart contracts, agreements that would combine with real-time data collection and analysis technologies to cover ground that traditional coverage can’t. Not only would mobile-accessible smart contracts streamline the process of transferring digital assets and accessing private data, they would alleviate the steps that people have to go through after any kind of unforeseen event that requires an insurance claim to be made. Imagine a world with automatic payouts!
Another advantage to using blockchain is security. Blockchain represents a form of decentralized ledger technology, meaning that it stores financial data across its network as opposed to in one primary location. It is also protected by cryptographic technology, making it highly difficult for hackers to penetrate.
Perhaps the most unique feature of blockchain security is its traceability. Blockchain transactions have distinct markers that allow currency to be traced in more of a long-term sense than it currently is. This would be incredibly useful in microinsurance and ensuring that money sent to underserved populations is actually getting sent to them and being used properly.
For a summary of all the ways in which blockchain could impact the insurance industry, check out this infographic produced by Willis Towers Watson Wire.
