The insurance The industry is essentially based on the legal promise to pay compensation in the event of damage. Trust is at the core of that promise. However, consumer confidence in their insurer is average. The Institute for Enterprise Value (IBV) surveyed 1,100 corporate insurance executives in 34 countries worldwide from May to July 2020; In addition, 10,061 insurance customers in nine countries were surveyed. The result in terms of customer trust is very strong: 42 percent of customers do not fully trust their insurer. Improving customer confidence must be a top priority for the insurance company Industry. Blockchain technology can help bridge the trust deficit.
Allowed Blockchain At its core, it uses distributed ledger technology (DLT) – a peer-to-peer network consisting of replicated data without the need for a central administrator. When an event needs to be recorded on the blockchain, each node goes through the transaction. When the required nodes agree on the outcome (consensus), each node records the transaction data in its copy of the ledger. Blockchain The technology also ensures that the data is tamper-proof or cannot be changed in any way.
Blockchain is the convergence of several technologies – peer-to-peer networks, cryptography, information security, smart contracts and more. Consensus, replication and immutability in a blockchain network offer the possibility of recording trustworthy transactions and thus providing origin and traceability.
Blockchain can enable easier and fairer processing and settlement of claims. Also enable better fraud management, efficient and transparent underwriting. Easier boarding for customers. Our previous blog describes the blockchain components and how companies can use the advantages to expand their network and gain competitive advantages.
The insurance industry is undergoing radical change as smaller market players redefine the customer insurance experience using blockchain, IoT, AI and other technologies. These new offers have a lot of potential to disrupt traditional players in the long run. The established companies have a clear advantage over new players, as they have access to long-term customers and in-depth knowledge as well as related data from their processes, value chain partners and the competitive environment.
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Token, identity, origin and platform (TIPP) in blockchain
In order to better understand the customer and gain insights into his behavior, Companies need access to trustworthy customer data. A consortium of insurance companies can leverage the platform and partnership benefits of a trusted corporate network using blockchain technology. TIPP with blockchain technology can help to overcome the challenges and transform the processes within the insurance value chain.
Token Providing a mechanism for representing assets in a blockchain in digital form. The digital asset can be any physical asset or even an agreement and can be traded between participants. Tokens enable the expansion of the ecosystem by allowing participants to own stakes in high quality assets and promote newer business models. Tokens enable traditional insurance value chains to be broken down so that risks can be assessed, transferred and managed by a group of independent service providers without having to rely on a central authority.
Trustworthy identity is the core of any system, not to mention a blockchain network. The insurance is highly regulated and is subject to the knowledge of your customers (KYC) and compliance with anti-money laundering regulations (AML) for participants. The decentralized identity provided by a blockchain network offers customers and partners in the ecosystem a higher level of trust. The customer’s private information is stored locally in a decentralized identity system and the blockchain network provides a framework for the exchange of data from customers to insurers. This in turn enables faster customer loyalty, as every insurer does not have to fill out the KYC again. The decentralized identity in an insurance network reduces the attack surface in the event of data breaches.
origin In a blockchain network, participants receive an immutable record of the assets and services that are exchanged within the network. Smart contracts can convert paper contracts into programmable code that automates claims processing and calculates insurance liabilities for all parties involved. The application process involves several manual steps in which the customer informs the insurer of the event either online or by phone. During a large-scale natural disaster in a region, the on-site adjusters find it difficult to deal with the large number of incidents. The availability of reviewers becomes a bottleneck in the entire application process. With the availability of trusted data, blockchain can speed up claims processing by automating some of the steps with the help of smart contracts.
Platforms are business models that create value by setting up the infrastructure to facilitate exchanges between two or more interdependent groups. Platforms are often a milestone in various industries because their business and operating models achieve a decisive advantage over competitors. According to a IBV Global C-Suite StudyCompanies that operate business platform models can achieve market valuations that are eight times their sales.
Transformation of the insurance industry with blockchain
Insurance companies have become more aware of the disruption ahead and are preparing to invest in creating insurance platforms. More than three quarters of Respondents on IBV Agree that blockchain platforms disrupt the traditional insurance value chain. Platforms can improve sales by enabling insurers to reach more customers, offer new and different products, and join a partner with value Ecosystems. You can also improve the cost side by moving away from legacy systems, thereby increasing flexibility. After all, they drive innovation and promote an innovation mentality.
The insurtech industry is looking for ways to gather newer streams of data that can help provide innovative solutions to customers. The proliferation of sensors and connected devices (IoT) can yield a large volume of data that can be used for analysis using AI. The information generated by these devices can lead to valuable insights that can be critical to new products.
Blockchain-based platforms can give more confidence to the data collection collected in the network and the use of customer data. This trust in the way the data is being consumed can lead customers to monetize the data by making it available to other parties on the network. Blockchain platforms can help simplify implementation and distribution as it creates trust in the system in terms of both quality and data consumption.
With blockchain-based solutionsCompanies have access to large amounts of trustworthy interaction data in their own ecosystem. The value of the insights gained from this data would be very valuable in new product development and pricing. Blockchain-based networks can help create trusted marketplaces for companies that provide data security while expanding the ecosystem of all participants to provide access to customers, brokers, reinsurers, sellers, bankers and regulators across the insurance ecosystem.