Blockchain and its benefits for the Insurance Industry

Right now Blockchain is considered the most disruptive technology invented in the last few decades that can be compared to the invention of the wheel, fire, and the internet. It has a tremendous potential to radically change on how business are run around the world today. While Blockchain finds its applications in almost all industries, for the focus of this discussion, we will discuss the applications of Blockchain in the insurance industry.

• What is Blockchain

A blockchain, originally block chain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a merkle tree root hash).

By design, a blockchain is resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority.

• Benefits of blockchain in insurance industry

1. improved efficiency through process simplication
2. Greatly improved risk management
3. Better claims experiences
4. fraud prevention
5. reduced turnaround time for claim payouts
6. reduced premiums
7. enchanced trust
8. improved *Know Your Customer* (KYC) compliance

Like all emerging technologies, Blockchain technology is also going through its phase of trigger to be followed by a phase of productivity and mass adoption. However, the current yet short lived obstacle to its adoption is regulatory control. Insurance organizations that fail to re-invent, experiment and adopt newer innovative technologies shall continue on their spiral of slow but imminent trajectory towards obsolescence, lest there is an insurance product to hedge against this loss

Feel free to contact E-SPIN for assist you adapt the trend for insurance industry, such as blockchain infrastructure availability, performance and security monitoring and testing solution.