Blockchain use in Insurance (Juniper Research)

INSURANCE IS A HUGE market, which has historically seen a significant proportion of funds lost as a result of inefficient systems, outmoded processes, errors and fraud.

Many of these problems stem from the often complex interactions between stakeholders (consumers, insurers, reinsurers, brokers), a lack of transparency, a heavy dependence on human intervention to manage processes and a reliance on paper-based contracts. Added to this, are the time delays from the requirement to share data across multiple systems. The business of insurance involves the collection and processing of huge amounts of detailed data, with pressures on the management of risk and the execution of contracts. The accurate validation of the information collected is core to the efficient functioning of the insurance industry, with stakeholders dealing with increasing pressure to combat fraudulent claims, meet stringent regulatory requirements and compete in an increasingly crowded market.

Blockchain has the potential to reduce the time required for verification processes, as well as facilitating fraud detection during policy and claims management. It offers opportunities to streamline underwriting and claims processing; allowing insurers to share data in order to reduce double claims, minimising the reliance on paper contracts and improving the whole experience for policyholders.

• Enabling the efficient exchange of information

• Helping mitigate risk through improved risk profiling

• Smart contracts help by automating formerly paperbased processes

Smart contracts can act as a tool to help fraud detection and prevention, particularly in areas such as P2P insurance where they can act to significantly increase trust. They offer benefits in insurance, as they can track claims accurately and provide an immutable record that can instantly accept or reject insurance claims made by a party, as well as specifying the rules between two parties, like paper contracts.