What are the Benefits of Blockchain in Insurance?
Blockchain technology will bring about significant efficiency gains, cost savings, transparency, faster payouts, and fraud mitigation while allowing for data to be shared in real-time between various parties in a trusted and traceable manner. Blockchains can also enable new insurance practices to build better products and markets.
Insurance companies operate in a highly competitive environment in which both retail and corporate customers expect the best value for money and a superior online experience. Blockchain technology represents an occasion for positive change and growth in the insurance industry.
With Ethereum’s smart contracts and decentralized applications, insurance can be conducted over blockchain accounts, introducing more automation and tamper-proof audit trails. Notably, the low cost of smart contracts and their transactions means that many products can be rendered more competitive for penetration of underinsured markets in the developing world.
Finally, the emerging blockchain ecosystem will itself require insurance. Cyber insurance can be taken as a template for coverage, with extensions and endorsements for financial loss (hot wallets and exchanges), specie and crime (cold wallets and vaults), professional liability (developers), and surety bonds (technology and software projects). Insurers can cooperate with tech companies, such as ConsenSys Diligence, to assess risk and advise on best practices for loss control and mitigation.