Although the insurance sector lags behind the banking industry, it has been positioned in a unique way to directly benefit from the blockchain technology. Blockchain can address the key issues faced by most incumbents, for instance poor customer engagement. Listed below are the most promising insurance-related use cases that have benefited from the blockchain technology.
1) Customer engagement: One of the most important hurdle in improving customer engagement through the blockchain technology lies in the area of personal data. The fear of losing one’s personal data as soon as it is handed over to a company is grave. Apparently the blockchain technology can play a huge role in improving customer engagement by offering transparency in claim handling.
2) Emerging Markets: P2P blockchains with smart contracts could be applied to micro-insurances in the emerging markets to offer them at low handling costs, if underwriting and claims handling can be automated.
3) Internet of Things (IoT): In this scenario of IoT, cars, electronic devices or home appliances can have their own insurance policies registered and administered by smart contracts in a blockchain network, automatically detecting damage first and then triggering the repair process, as well as claims and payments.
4) Reduced administrative cost: Blockchain will also help reduce the operations cost through automated verification of the policy holder’s identity, audit-able registration of claims and data from third parties and payouts for claims via a blockchain based payments infrastructure or smart contracts.
In conclusion, although Blockchain is a digitization technology that can be of strategic interest to insurers, the biggest challenge to its implementation is facilitating collaboration between market participants and technology leaders in shaping a regulatory environment.
Reference: http://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/Blockchain%20in%20insurance%20opportunity%20or%20threat/Blockchain-in-insurance-opportunity-or-threat.ashx
I believe that technology will disrupt all components of the service industry. Like banking, the insurance industry heavily involves humans to do a lot of the work. With technology, many tedious tasks can be replaced through automation, increasing efficiency and reducing errors. I think blockchain will help insurance firms cut costs and provide better services.