How could Smart Contracts affect the Insurance Industry?
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How will blockchain technology affect Insurance Industry? Some ideas for decentralized applications in the Insurance domain, which will make insurance companies more trustworthy and will eventually eliminate all the inefficiencies in a way that the exchange of sensitive information between partners will be safer.
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How could Smart Contracts affect the Insurance Industry?
- 1. How could Smart Contracts affect the Insurance Industry? Discourses on some use cases
- 2. A little bit of myself George Theofilis Blockchain Developer @ Synaphea. Synaphea was an inspiration of mine, with the ambition to make the transition to a decentralized world easier for a business. I am working with DLT authoring smart contracts on Ethereum and Fabric and I am also creating a web based front-end for smart contract application. • 4+ years of experience in software engineering. • Contributor @ iroha-javascript
- 3. Issues/Opportunities on Insurance Tech? Improve trust Lack of trust, high costs and inefficiency of the insurance industry all play a part in the extraordinary high levels of underinsurance. Enhance efficiencies There is a lot duplication when customers give their personal data, in addition some records can’t digitized because of the fear of a fraud. Improved claims processing through smart contracts Insured individuals typically find insurance contracts long and confusing while the insurance companies are battling an extraordinary amount of fraud. Fraud detection and prevention A great portion of claim requests are fraudulent, as an example in USA 50% of them are scams.
- 4. Use case in the Industry One consortium and two very prominent applications.
- 5. Individual Prototyping B3i Prototyping B3i Parallel Run 2016 Fictive contracts, fictive data 2017 Real contracts, fictive data 2018 Real contracts, real data The first product developed by B3i is a Property Cat XOL contract. The Prototype covers the core functionality required to enable a distributed smart contract management system for Property Cat XOL contracts. B3i Blockchain Insurance Industry Initiative
- 6. Ethersic Problem: By law, airlines are required to compensate travelers for flight delays or cancellations, but as anyone who has tried knows, the process is a nightmare. FlightDelay & Fizzy Flight insurance policy Passenger Insurer Buys a coverage package, and he pays a fare. In case of a flight he is payed by the smart contract He offers a insurance package Solution:
- 7. Norbloc, KYC-Chain, Tradle etc. KYC on Blockchain PROS • Building a trust provisioning network • Efficiency and trust in identity • Secure, compliant data sharing • Proper compliance • Full transparency • Reduced duplication • No more papers COS • Personal data protection • Deletion of user data • Share data between companies, confidentiality issues
- 8. Future applications Some ideas for blockchain application Market Investments Matching of the transaction details of the buyer and seller Financial Audit and reporting Standardization would allow auditors to verify a large portion of the most important data behind the financial statements automatically. Index based livestock Insurance Program Once a certain dryness threshold is reached, the farmers insured under the scheme automatically receive a lump sum payment which they can use to buy feed for their livestock. Internet of Things (IoT) In usage based insurance Parametric insurance Fully automated insurance products where an insurance contract is captured using smart contract language Automate underwriting and claims Handling Automating the underwriting of policies and claims handling – combined with approvals/verifications from other policyholders Insurance of high-value assets Faster cycle time and possibly no touch claims handling Medical claims processing By capturing and tracking changes to the claims file on a shared ledger, and confirm the applicable terms and conditions at various processing steps in the claims processing chain.
- 9. Adoption challenges Building a comprehensive set of asset profiles and history Engaging the market and enforcing a specific DLT as dominant mechanism for asset registry may be challenging to implement and will require stakeholders diligence Adopting standards for relevant claims data Changing current company- specific processes and data sets to a shared standard will require extensive discussion and converging interests Providing a legal and regulatory framework Careful and close collaboration would be required since stakeholders will likely have competing interests and senses of urgency to establish a shared framework Source: IBMs Blockchain: Emerging Use Cases for Insurance
- 10. You can find us at: www.synaphea.com github.com/synaphea info@synaphea.com
Notas do Editor
- There’s a crisis of trust in the financial services industry. Even though the large banks are the focal point, the erosion of trust impacts all businesses. Lack of trust, high costs and inefficiency of the insurance industry all play a part in the extraordinary high levels of underinsurance. For example, only 17% of California households carry earthquake insurance even though the likelihood of experiencing losses from an earthquake are high. Blockchain facilitates building trust of consumers because it provides transparency. Anyone who has changed insurance companies or healthcare providers knows how inefficient the data-entry process is to get coverage or care started. In addition, customers have a very real fear of losing control over their personal data. Blockchain provides a solution to drive efficiency and security that would allow the personal data to be controlled by an individual while verification is registered on the blockchain. Tradle is one company trying to develop blockchain solutions for know-your-customer (KYC) data. The goal would be to have the KYC data verified and then it could be securely forwarded to other companies to use without the need to repeat the data entry or verification process. The insured and the insurer each currently have issues that blockchain and smart contracts could solve. Insured individuals typically find insurance contracts long and confusing while the insurance companies are battling an extraordinary amount of fraud. Through blockchain and smart contracts, both parties would benefit from managing claims in a responsive and transparent way. It would start by recording and verifying contracts on the blockchain. When a claim is submitted, the blockchain could ensure that only valid claims are paid. The network would know if there were multiple claims submitted for the same accident. When certain criteria are met, a blockchain could trigger payment of the claim without any human intervention, therefore improving the speed of resolution for claims. One of the most compelling reasons insurance companies should investigate blockchain is its potential to detect and prevent fraudulent activity. An estimated 5 to 10 percent of all claims are fraudulent which, according to the FBI, costs U.S. on-health insurers more than $40 billion per year. Validation is at the core of blockchain technology’s decentralized repository and its historical record which can independently verify customers, policies and transactions for authenticity. In order to work to its full potential, this would require extensive cooperation between insurers, manufacturers, customers and other parties who would use the blockchain to share info to prove policies, purchases of products, verify police reports and more. Blockverify offers a service for users to check for stolen or counterfeit goods and fraudulent transactions by storing the history and supply chain in the blockchain.