Blockchain technology has been touted as the most significant technology since the internet. It promises to resolve some of the foremost issues that plague industries across the board, erasing inefficiencies, increasing transparency and better connecting stakeholders.
As those familiar with Evident Proof’s mission know, we’re particularly interested in the applications of the technology in the insurance industry – it’s one of the major use cases we’ve been developing a solution for. Considering the central role of insurance in today’s society, it’s probably time that some of its long-standing issues are addressed.
Chief amongst these is undoubtedly the lack of transparency. On one hand, this impact customers purchasing home, vehicle or medical insurance – when signing up for policies, it’s impossible for them to understand exactly what’s covered, and what needs to be paid for out of pocket should an incident arise. On the other, insurance companies have a harder time identifying fraud, both internally and externally (a recent McKinsey & Company report estimated that 5-10% of claims are fraudulent).
Integrating blockchain technology into businesses operating in the sector seems logical: at its core, a distributed ledger is an immutable database, owned by no single party. Unlike the databases seen for the past few decades, which are subject to the whims of a centralised party, decentralised ones cannot be altered in any way, as copies are scattered across synchronising nodes. To make a change, consensus between these nodes has to be reached (therefore, if an attacker wishes to modify it in in any way, the change will simply be rejected).
Blockchain databases essentially make deletion impossible. The result is a cryptographically-secured list of records, stored forever. More importantly, these are visible to all. Companies opting to implement distributed ledger solutions into their operations benefit both themselves and their customers: on the customer’s side, there is a wealth of easily-accessible information on previous incidents, the factors surrounding them, and how the company handled the process. On the business side of things, it means that claims lodged cannot be tampered with, and that companies can create a virtual and immutable paper trail to prevent fraud within the company.
Blockchain technology’s potential in the insurance industry is widely recognised. A 2017 report by EY highlighted some of the aforementioned areas (fraud prevention and claims management) whilst also exploring the role IoT could play for generating reliable and traceable data.
We’re witnessing both startups and existing companies researching and implementing blockchain solutions in this manner – we’re proud to have already begun providing verification services for players in a handful of different industries. I anticipate that very soon, we’ll see the confidence of both consumers and businesses rise, as transparency and immutability enabled by blockchain technology allow for a much clearer and efficient overhaul to the insurance sector.
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