The insurance industry was one of the earliest adopters of blockchain technology after banks due to data protection concerns. As a result, insurance companies can use blockchain to securely store information about policies, transactions, and claims in a virtually impenetrable format. The industry's early adoption of blockchain makes it one of the best industries for advancing technology. By storing data on the blockchain, insurance companies can reduce human error when completing tasks such as processing claims or updating records. For example, someone might forget to change a name on an insurance policy. While trying to find the original policy, they may accidentally process it with someone else's information and even create a dispute. This human error makes it very difficult to pay claims because claims are often processed manually rather than by machine.
Blockchain solves this problem by storing each side of the transaction in an immutable record that cannot be changed or altered. This blockchain technology is also more secure than systems that rely on a central authority, such as large servers, because hackers have to simultaneously hack all the computers in the world to gain access to these records. The benefits of blockchain for the insurance industry are many. One of the most important is that due to the immutable nature of the contracts stored on the blockchain, there is no need for any third party to mediate. There are also many opportunities for automation with smart contracts. For example, smart contract technology can automate the entire claim process. There are many different use cases for blockchain in the insurance industry.
For example, blockchain-based policies that combine property and casualty insurance with data can protect premium payers from fraud while constantly creating essential customer information that is more easily accessible for insurers. Blockchain is also creating new opportunities for reinsurers who can integrate their offerings with smart contracts. The global insurance industry is experiencing a major disruption and blockchain is playing a vital role in future insurance modernization. Of course, insurance will always have a place in society as long as people want to protect themselves against risk, but having much smarter policies with built-in rules and automation can improve the customer experience while making policy management more efficient. Smart contracts are part of the way, but there are other issues that need to be resolved.