Consumer Benefits Of Adopting Blockchain Technology In The Insurance Sector

Blockchain is a shared, distributed ledger with non-repudiation of transactions that can work in the absence of trust across a peer-to-peer network. Blockchain technology has the capacity to deliver wide-ranging benefits to humanity that are obfuscated by the charged debates on cryptocurrencies these days. Applied to insurance,blockchain technology opens the door to many positive developments for consumers,such as:

Faster claims reimbursements

With blockchain technology insurers can automate and efficiently process claims, so that that claims can be settled more quickly. For example,currently, when a policyholder dies, beneficiaries must complete the death registration formalities and initiate the claims process with the insurance company. Since this bureaucratic process takes place during what is already a stressful and traumatic moment in a beneficiary’s life, many crores of life insurance benefits go unclaimed. In many cases, beneficiaries don’t even know they’re entitled to a payout.

However, if policyholders, beneficiaries, municipalities,the police,hospitals, crematoria, cemeteries, the courts and life insurance companies all existed as nodes on a blockchain, the claims process could occur automatically, as soon as it is legally established that a person is dead and beneficiaries could focus on more pressing issues.

Peer-to-peer insurance

The security measures and smart contracts built into some blockchains allow geographically and economically dispersed people to trust each other. Peer-to-peer insurance is the collaborative agreement wherein a group of individuals agree to pay for other individuals’ claims, spreading the risk across the group.Peer to peer insurance is a potential alternative to group insurance provided by a third party.

Usage-based insurance

Usage-based insurance that’s so popular with millennials wherever it is offered is likely to become more common under a blockchain-based system. Under usage-based insurance, coverage or policy premiums are directly connected to individual behavior.Since blockchain enables companies to capture and track data on a more detailed level than was possible before allows insurers to gain deeper insight into policyholders’ daily behavior. Because of this, policyholders will see their insurance rates based more heavily on their behavior, such as distance and speed they drive, the number of steps they take in a day or the number of hours they spend in their house each week.That way people pay for their actual behavioral choices rather than what insurance companies deduce will be most likely outcomes based on variables such as age,income,credit-scores etc.