Blockchain has the potential to change how insurance companies do business. Blockchain can help carriers save time, cut costs, improve transparency, comply with regulations, and build better products and markets. Blockchain will enable provenance, Immutability, finality, smart contracts, and shared ledger with audibility.

Benefits of Blockchain in insurance –

·     Automate underwriting: Increase speed and cost efficiency with smart contracts.

·     Automate claims settlement: Cut costs with an automated claim and data verification.

·     Reduce fraud and abuse: Prevent misuse with improved traceability and accountability.

·     Event-triggered smart contracts

·     Increased back-end efficiency

·     Fully automated insurance products where an insurance contract is captured using smart contract language and the underwriting and claims processes are event-driven using real-world sensors and data

Cost savings is a major benefit that blockchain can provide. It is logical to see that claims, administration, underwriting, and product development can be impacted by the use of blockchain, and today, much of blockchain use cases have been focused on cost reduction efforts.

Blockchain use cases in the insurance industry

1. Fraud detection & risk prevention: By moving insurance claims onto an immutable ledger, blockchain technology can help eliminate common sources of fraud in the insurance industry.

2. Health insurance: With blockchain technology, medical records can be cryptographically secured and shared between health providers, increasing interoperability in the health insurance ecosystem.

3. Reinsurance: By securing reinsurance contracts on the blockchain through smart contracts, blockchain technology can simplify the flow of information and payments between insurers and reinsurers. PwC estimates that blockchain can help the reinsurance industry save up to $10 billion by improving operational efficiency.

4. Life insurance: Blockchain technology can take the burden of filing a death claim away from family members by replacing the manual process of filing claims with an automated system built on a blockchain ledger.

5. Property & casualty (P&C) insurance: By allowing separate policyholders and insurers to track and manage physical assets digitally, blockchain technology can codify business rules and automate claims processing through smart contracts, while providing a permanent audit trail.

#Smart Contracts

Smart contracts can automatically determine whether to transfer an asset to the nominee or back to the source, or a combination of both. It does not necessarily create a contract or legal act, but can sure validate a condition.

Insurance policies could be written as coded, decentralized smart contracts in which an individual agrees to pay the insurance company money in return for the company’s promise to help cover that person’s future medical costs. Blockchain smart contracts will create immutable data based on an insurance policy owner’s records that can immediately accept or refute any insurance claims made to the company.

Insurance success stories

1. The Blockchain Insurance Industry Initiative (B3i) announced that “Allianz and Swiss Re have successfully placed the world’s first legally binding reinsurance contract on distributed ledger technology (DLT), enabled by B3i’s live production network.” B3i Members include AIGAllianzAegon, and Swiss Re.

https://www.crowell.com/NewsEvents/AlertsNewsletters/all/Worlds-First-Reinsurance-Contract-Bound-Using-Blockchain-Technology

2. Anthem, the second-largest health insurer in the US, is testing out various blockchain-based applications, including those that would make it easier for patients to access their medical records and data. The company started testing out a mobile app in late 2019, where customers can access the app, scan a QR code, and grant various healthcare providers access to their health data. By storing a customer’s healthcare data on a blockchain-based public ledger, no single party will own all the data. Instead, customers will essentially control access to their medical data. For Anthem, this technology will help it process “huge transaction volumes,” which can be up to 300,000 transactions a week for patient health data.

https://www.fiercehealthcare.com/tech/how-anthem-using-blockchain-technology-to-free-up-patients-data

3. openIDL streamlines regulatory reporting for U.S. insurance industry with Hyperledger Fabric.  American Association of Insurance Services(AAIS) also serves as the administrator of openIDL, the insurance industry’s regulatory blockchain, providing unbiased governance within existing insurance regulatory frameworks. Large insurers can save millions of dollars on annual regulatory reporting costs.

https://www.hyperledger.org/learn/publications/openidl-case-study

4. Change Healthcare using Hyperledger Fabric to improve claims lifecycle throughput and transparency. Implementing Hyperledger Fabric took just a couple of months. Since January 2018, the test network demonstrated the ability to process up to 50 million transactions a day—with throughput up to 550 transactions a second. That’s enough capacity to handle all claims activity that occurs on the Change Healthcare Intelligent Healthcare Network.

https://www.hyperledger.org/learn/publications/changehealthcare-case-study

5. Marine insurance has a notoriously complex premium-setting process, which made it a great prospect for a blockchain-based overhaul. Global professional services firm EY worked with Microsoft, network security expert Guardtime, blockchain technology provider R3, and global shipping giant A.P. Moller – Maersk to create Insurwave, the world’s first blockchain platform for marine insurance.

https://customers.microsoft.com/de-de/story/insurwave-insurance-azure

6.  MetLife is utilizing the live public Ethereum blockchain to add transparency and efficiency to the claims process. MetLife Plans To Disrupt $2.7 Trillion Life Insurance Industry Using Ethereum Blockchain.

https://www-forbes com.cdn.ampproject.org/v/s/www.forbes.com/sites/stevenehrlich/2019/06/19/metlife-plans-to-disrupt-2-7-trillion-life-insurance-industry-using-ethereum-blockchain/

7. Thai Re launches IBM blockchain-powered reinsurance smart contract platform. Thai Re hopes to streamline how it handles more than 10,000 annual reinsurance contracts with its insurance partners, making it easier for those insurers to grow their businesses. “Thai Re’s ‘Insurer Network’ platform can improve operational scalability and flexibility, in addition to speed and transparency, to the ecosystem of insurers in Thailand.

https://www.reinsurancene.ws/thai-re-launches-ibm-blockchain-powered-reinsurance-smart-contract-platform/

8. The Blockchain Insurance Industry Initiative (B3i) has announced that 30 reinsurance contracts have now been concluded on its platform, with participants including Allianz Re and Generali. A total of 9 insurers, 4 major brokerage firms, and 8 reinsurers part of the DLT platform.

https://www.reinsurancene.ws/b3is-blockchain-platform-places-30-reinsurance-contracts-at-1-1/

“The reinsurance transactions show that distributed ledger technology will be a powerful solution for insurers, brokers, and reinsurers to grow their business while creating material efficiencies over existing technology. B3i offers the only DLT-based solution in production and is capable of handling reinsurance placements today,” said John Carolin, CEO of B3i.

9. Re/insurance broker Aon has partnered with Oxfam and insurtech firm Etherisc to launch a blockchain-based insurance platform for smallholder farmers in Sri Lanka. By utilizing blockchain, Aon and its partners can automate the claims process so that farmers do not need to submit claims, and claims adjusters do not need to be sent into the field. This is expected to reduce administration costs and make the product more affordable for farmers.

10. The Institutes RiskStream Collaborative and LIMRA have announced that a total of 15 new re/insurance companies have become members of their enterprise-level blockchain consortium. New members in the life and annuity sector include: American Family Life Insurance Company, American Fidelity Corporation, Horace Mann Educators Corporation, John Hancock, Nationwide, Prudential Financial, Inc., Securian Financial, USAA.

https://www.reinsurancene.ws/the-institutes-limra-add-15-new-members-to-blockchain-consortium/

Please check www.reinsurance.com for more reinsurance projects details who are using blockchain.

As per the PWC report “Blockchain: The 5 billion opportunity for reinsurers”

Nearly 80% of insurance executives have either already adopted or planning to pilot blockchain technology across their business units. The level of trust, transparency, and immutability that blockchain (distributed ledger technology) provides is impeccable.

MarketsandMarkets expects blockchain technology’s share in the insurance market to reach $1.4 billion by 2023. 

Reference: 

https://www-mantralabsglobal-com.cdn.ampproject.org/v/s/www.mantralabsglobal.com/blog/blockchain-use-cases-in-insurance-industry

https://consensys.net/blockchain-use-cases/finance/insurance/

https://builtin.com/blockchain/blockchain-insurance-companies

https://www.pwc.com/gx/en/industries/financial-services/publications/blockchain-the-5-billion-opportunity-for-reinsurers.html

https://www.munichre.com/us-life/en/perspectives/underwriting/blockchain-implications-insurance-industry.html

https://www2.deloitte.com/ca/en/pages/financial-services/articles/blockchain-in-insurance.html

https://www.pwc.in/assets/pdfs/healthcare/revamping-indias-health-insurance-sector-with-blockchain-and-smart-contracts.pdf

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