Blockchain technology is a distributed ledger which is a shared database of transactions with validation and encryption. These transactions conform to a fixed protocol maintaining a central data repository and undergoes updating with each transaction.
Blockchain is now enabling people to handle policies for multinational clients by recording the overall contract and splitting it country by country, and this helps in providing a certainty, to the client and to external stakeholders.
Honesty and trust are believed to be the key factors for two or more companies before they decide to do business together and which is why a company could make gross payments that will be reflected in a Blockchain for all the companies to see, thus creating an ambience of transparency.
Blockchain has been adopted by a few insurance companies in the aspect of tracking things like policies, imposing operational limits on policyholders, and so on and has the potential to resolve several financial and logistical problems. The technology becomes particularly useful when many parties are there for a particular transaction. It offers benefits like confidentiality of data, saving on transaction costs and transparency.
Blockchain offers solutions to most problems facing insurers as well as the customers. The process of changing an insurance company is a lengthy and exhausting process with the risk of losing control over information by the customers. Blockchain offers the security of information and the efficiency of operations where an individual can have complete control over the information while the confirmation is present on the Blockchain.
Blockchain and smart contracts can remedy issues the insurance industry is facing. It is observed that customers find insurance contracts to be too long and confusing while insurance companies are facing frauds at various levels. Smart contracts can help in supervising claims’ transparently, at the time of submission of a claim, blockchain will make sure the passing of only valid claims and there are multiple claims about the same incident, blockchain would ensure the passing of only correct claims, without requiring any human intervention. Thereby facilitating the process of resolution of claims.
There are significant benefits that blockchain has to offer and a number of insurance companies are trying to commercialise it. As a result, the need for Blockchain developers is on the rise in the insurance industry.