The banking, finance, and insurance industry are using blockchain technology. As per the reports from SAP Digital Transformation, the executives in these industries are planning to double the blockchain investment in the coming years.
The insurance industry especially is aware that it has to evolve to live competition, and for this, they must streamline strategies to meet the needs of their digitally savvy clients.
Blockchain technology development can help people and companies to face the insurance industry challenges as it creates transparent, trustworthy, and stable operations.
In order to completely apprehend the modern-day insurance industry aspects, we can define a number of the demanding situations which businesses face and the number of ways how uses of blockchain technology can help!
The Blockchain Technology and Insurance Industry Overview!
Insurance has been around for centuries, and the technologies are modifying several industries during the last decade.
Though the blockchain technology created extreme hype in the last few years, its applications are killer antique. Also, it has the capacity to be a transformative pressure for industries like banking, finance, and insurance, with complete coordination and cooperation of intermediaries’ incentives.
Many insurance companies and blockchain app development companies in the USA are combining forces in a significant regulatory and legal way to give benefits to the insurance customers and clients.
One of the main obstacles that the insurance industry faced in the past is not the availability of the Cloud. But, with blockchain apps, now the Cloud is also accessible!
Though it is very early and predicts that this new decentralized technology can overcome the insurance hurdles, one thing is sure that the future has standard in blockchain insurance collaboration.
The possibilities are endless, and the exploration of the technology is at full throttle!
What Are The Insurance Industry Challenges?
There are many challenges in the insurance companies related to complex compliance, mature market growth, fraudulent claims activity, handling huge amounts of data, third party payment transactions, and more.
We all know that the data is growing day by day, and with the setting up of more IoT devices, it is becoming more necessary to deliver tailored business services and products.
Likewise, in the insurance industry, the Insurers must also collect, accumulate, and manage data effectively. It is because their work also revolves around data. The insurance company that has more data will be visible more in the market.
According to the reports, 5% to 10% of insurance claims are fraud and have no secure data in them. If not made correctly, then the entire structure of the industry will collapse.
For an insurance company, data is related to digital transactions and customer databases. And blockchain technology helps the insurance company to set up and streamline a secure sensitive information-based process.
Implementing such a process would need a hefty amount, which is one of the biggest insurance industry challenges.
How Blockchain Technology Development Rescue Insurance Industry Future?
First things first, we must not see blockchain as a savior and solution to all insurance-related problems. The use of secure blockchain apps can be a founding technology promoting trust, transparency, relatability, and stability.
True that the blockchain technology features are in the early stages, but the way they have created a handful of applications and software for different industries, I believe that mitigating to the blockchain will be a good step for the insurance industry.
The Blockchain technology features Security, Big data, Fraud Detection, Third-party transactions, Smart contracts, and Reinsurance in Financial Services, Government and Public Sector, Healthcare, and Legal Affairs.
Client Onboarding, Underwriting, and Claims Processing are three main places where I think the insurance industry can reap out huge benefits from the uses of blockchain technology.
Additionally, the bank & finance-related processes, claim processes, and more will become fully digital and automatic; thus, making the insurance industry quicker and accurate!
Blockchain Technology Benefits & Drawbacks
Blockchain technology acts as a synonym of improved accuracy, low-cost processing, better privacy, and intelligent security. As a result, this technology reduces human errors.
The basic fact is that blockchain technology, especially its applications and software are decentralized. An insurer can’t share the confidential data easily. First, he/she needs permission and second the structure of the blockchain securely.
This would ensure that the insurance companies now have a great way ahead with blockchain-enabled and streamlined processes to provide effective and efficient services with an increased value to their customers.
Today, in 2020, to save the insurance companies from failing, I would suggest that automation via blockchain is highly needed to create more affordable insurance policies and services with lower premiums.
Also, the blockchain prevents cyberattacks and data related hacking attempts from happening! But, the public availability of the blockchain might put the insurance company at risk.
Right now, the criminals aren’t fully capable of understanding the technology. Hence, they can’t exploit private data. But, in the future, it can turn around.
The toughest part of all is that to adopt it in the insurance industry, setting up strong ethical standards and regulations is highly required.
Therefore, maintaining and integrating this new decentralized system in banking, finance, and insurance companies needs a high amount of investment!
Yes, blockchain is still an infant, but the use case makes it a promising technology of the future across the insurance industry as the companies sink their teeth into it.
The coming possible blockchain apps and solutions would definitely work robustly and securely, but the time will tell how the blockchain technology will disrupt the insurance industry in the future!
James Burns is the Founder &CEO of CMS Website Services, a globally blockchain development services company in USA. With 10+ years of experience in designing, and development he has all solutions to your IT problems as a tech-business person.