While many people are aware of the technology that powers cryptocurrencies like Bitcoin, fewer people understand how blockchain technology works, what industries it’s affecting, and how it can benefit your business specifically. Blockchain technology allows two or more parties to communicate without an intermediary or middleman involved in the transaction, which cuts down on costs and time while increasing the level of trust between all parties involved in the transaction. The insurance industry is one of the first sectors to reap the benefits of blockchain technology; here are five ways it will affect businesses in this sector.
1) Security
The technology has helped create a robust network that’s nearly impossible to hack. Because of its decentralized nature, blockchain doesn’t rely on a central server—and hackers can’t shut down or take down a blockchain. Blockchain ... and other emerging technologies have huge potential to help build more secure insurance products and services for consumers, says Aaron Moore, global lead for Accenture Security Services.
2) Speed
Unlike traditional systems that rely on constant communication and transaction between various participants, blockchain records all activity at each point on a ledger or database. The goal is to create a consistent and reliable platform that can automatically verify every transaction—no matter how large or small—in a matter of seconds. In other words, you can process transactions faster with blockchain technology because there are fewer checks involved. The same principle applies to policies (like insurance) and claims; once submitted, these will be processed faster using blockchain technology.
3) Compliance
Shared ledger technology is far more secure than centralized databases because there’s no one point of failure—the blockchain is a distributed database that can only be updated by consensus between users. This means that a hacker would have to infiltrate many points in order to falsify or steal information, which makes it far more difficult for hackers. Insurance companies are dealing with compliance issues with increasing frequency and severity, so anything that can help cut down on cybercrime should be embraced quickly and wholeheartedly.
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4) Regulation
The need for regulation within an industry doesn’t only prevent fraud, it also boosts consumer confidence and can reduce costs associated with redundant processes. In a 2015 study from Juniper Research, it was projected that blockchain-based insurance solutions could save $16 billion per year by 2022.
5) Cost Reduction
It can reduce costs by removing third parties. It allows you to do more with less human capital, which means insurance companies don’t have to invest heavily in hiring new workers or paying out benefits. In fact, a recent report from Accenture shows that blockchain could save 20% of costs on average across different industries. This represents a substantial amount of money for insurers.
Conclusion
In today’s global world, insurance plays a vital role for every entity or firm. Businesses and firms have become dependent on acquiring certain types of insurance policies to guard against risks that could affect their operations. Thus, blockchain technology has helped facilitate an innovative approach for managing risks associated with various kinds of insurance policies by keeping a check on fraudulent activities. Blockchain technology provides an online ledger that stores data of all transactions happening at any given point in time. You can take the help of blockchain development companies in India.
