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Making Blockchain Technology In Life Insurance Work For You


wealthymattersBack in April 2018, when I read the press release from Cognizant about having teamed up with a consortium of fifteen Indian life insurers and developed a blockchain solution to facilitate cross-company data-sharing to help these life insurers reduce their reliance on data intermediaries and aggregators in obtaining customer and policy details for a wide range of critical purposes, such as know-your-customer due diligence, financial and medical underwriting, risk assessment, fraud detection, and regulatory compliance, I was FURIOUS.

Why?

You see, I am a long-standing customer of 2 of these 15 life insurance companies. One of them was the company I made my very first purchase from all those years ago, on the recommendation of a banker I trusted. And at that time I had in all honesty made full disclosure of all the information they sought in their proposal forms and the additional queries their underwriters had. However, I made the disclosures for the limited purpose of purchasing specific policies from these companies. And at a time that block-chain was nowhere in anybody’s mind space.

Under the changed scenario the least I would have expected of these companies was a by your leave. Which was sadly never sought from me. And mind you, I couldn’t be considered a particularly big risk for these companies as I have already lived long enough to collect a few survival benefits from them. Instead I find myself betrayed, used, faced with a fait-accompli. My details are now with one US company I have no dealings with and a whole lot of life-insurers I have never bought anything from and don’t see myself buying anything from in the foreseeable future. Worse I have no guarantee that my information has not been traded a few more times since April.

IRDA in the meanwhile was either sleeping, dead to this industry development reported in the daily the newspapers or worse saw nothing remarkable in life insurers proceeding to improve their margins without intimating policy holders that they proposed to share their information with other companies the consumers had never approached, ever. Might never approach in their life-times.

I was mad…But I’ve always been taught to not just be mad but to get even. So I applied my mind to evening the score and soon had my answer: The Singapore-based fintech startup – fidentiaX and their idea of a marketplace for tradable life insurance policies on the block-chain. And where there is one start-up, can others be far behind ?

In case you are wondering, tradable life insurance policies are insurance policies that can be sold to third-party buyers. Most life insurance policyholders are not aware that their policies can be sold onto third-party buyers in the tradable insurance policy market. But in the case that a life insurance policyholder no longer requires his or her policy, they don’t have to surrender their policy back to the insurer they bought it from and meekly accept the whatever surrender value insurers offer. They can sell it to third parties for better value.

Currently, the market for tradable life insurance policies is complex and difficult to access. Through the implementation of blockchain technology in this space, however, all that can be changed. fidentiaX aims to build a marketplace that uses the blockchain to tokenize life insurance policies so that they can become easily tradable financial products that anyone can buy to hold in their investment portfolio. The tokenization process involves thorough due diligence on all life insurance policy documents before digitizing them and recording them onto the marketplace’s distributed ledger. By building a marketplace on top of the blockchain, buyers and sellers can transact in a transparent and secure  manner as all actions are recorded on the blockchain for all involved permitted participants to view and audit. This also alleviates the need for intermediaries, which particularly play a role when it to comes to mortality events and the subsequent processing of a life insurance payouts.

Now, assignments and trading in life insurance policies has often infuriated the life insurance establishment in India, nevermind that the Insurance Act didn’t quite support their position till 2015 when section 38 was amended to allow insurance companies to decline assignments that a policyholder might request. But then an Indian Insurance Law doesn’t apply to foreign companies in foreign soil. And with a policy on the blockchain, there really is no reason why Indians can’t invest conveniently in foreign insurance policies that may have the added advantage of paying out in hard currency. Why be tied down to supporting local insurance companies and the government that likes your money in insurance, thank you very much, but can’t be bothered to keep your interests in mind even as they serve their own interests?

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About Keerthika Singaravel
Engineer,Investor,Businessperson

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