Much has been made about blockchain’s utility across different industries. Critics contend that the technology is mere hype, that the difference it makes is marginal and not worth spending money on. Supporters, on the other hand, readily admit that blockchain is not the panacea being trumpeted in some corners, but also recognize that there are use cases where it actually makes sense. It’s why significant resources are being dedicated to blockchain research by some of the world’s largest companies.
Insurance is one such use case. In fact, blockchain is exactly what is needed to inject some innovation into an industry that has not changed much in decades. From global insurers down to start-ups, we are seeing a wave of new products and services, everything from flight delay insurance to improved risk modelling.
But why the sudden interest? What is it about blockchain that actually makes sense for the industry?
Imagine a situation where insurance companies can share customer KYC information instead of having to investigate every individual that wants to buy insurance. It could mean savings of thousands of dollars per customer. Blockchain makes this possible by allowing multiple insurance companies to contribute information to the same decentralized ledger. And because the data is immutable, the insurance companies can trust that it is authentic. One such information are claims records. If insurance companies contribute information to the same blockchain, duplicate claims can easily be detected.
Historically, consumer data has been stored behind the walls of insurance companies. Consumers have little in the way of visibility of this data, and instead are given only what the insurance company decides via a portal. And if the information is shared with third parties, the consumer is not notified about it. The open and decentralized nature of blockchain means that consumers will always be able to see the data the insurance company has and what is being done with that data.
It is not unusual for consumers to mistrust insurance companies. Confusing policy terms, high premiums, and long claims processes all contribute to this. The blockchain, specifically smart contracts, bring trust back into the equation by simplifying the insurance contract and, with the help of AI, automating claims. No human intervention required. SURETY.AI simplifies the purchase process to get you the exact coverage you need, while its machine learning algorithm handles payouts without the need for filing a claim.
Smart contracts are programmable contracts attached to the blockchain. They are autonomous and, therefore, do no require human intervention. For the insurance industry, smart contracts enable micro-insurance policies to be issued and claim payouts to be automated. (read our article here)
One reason the claim payout process is slow is the need for fiat currency cheques or bank transfers. Consumers sometimes wait for weeks for the payout to appear in their account. Using digital tokens accounted for on the blockchain solves this problem. Payouts can be made instantly and then be re-used to buy additional coverage.
Fraud is a major problem in the insurance industry, costing an estimated 80 billion USD each year (http://www.insurancefraud.org/statistics.htm). Blockchain, smart contracts, and AI can help reduce this figure by requesting information verified by AI from multiple sources before paying out a claim. And the immutability and decentralization of blockchain allows insurance companies to share fraud information.
What all of this adds up to is lower premiums for consumers. Personalized insurance coverage has never been so affordable.
Hearti is committed to providing the most innovative and hassle-free insurance products to its customers. Blockchain is one of the technologies that will help us get there.
SURETY.AI is a blockchain based artificial intelligence (A.I) platform for insurance companies developed by Hearti Lab Pte Ltd (Hearti).
SURETY.AI allows insurance companies to connect effectively with their customers by offering micro-insurances, on-demand and at affordable prices, to Asia’s fast growing economies through Decentralised Enterprise Insurance Network.
As insurances are closely tied to healthcare, where healthcare services such as medical check records are often used for underwriting and preventive measures, Hearti is also working with Healthcare partners to integrate their services and data into SURETY.AI.
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Part 7: How blockchain benefits the insurance industry was originally published in Hearti on Medium, where people are continuing the conversation by highlighting and responding to this story.