The application of blockchain technology to the insurance sector
With its potential to streamline complex processes and the capacity to enhance transparency and efficiency, Blockchain technology is well positioned to provide modernised insurance to a new generation of consumer.
The features inherent in the technology lend themselves perfectly to the insurance sector and are ideal for the technology’s implementation, with potential benefits for both the insurer and insured across the value chain including: maintaining the integrity of data across multiple ledgers; peace of mind for end-users as to the accuracy and integrity of data being stored; more efficient yet comprehensive KYC processes and real-time settlement of claims through the use of smart contracts.
While the benefits are numerous, the process of migrating to the Blockchain necessitates careful planning, investment and a predisposition to welcome radical changes to legacy systems and responsibilities. An understanding of the potential risks associated with deploying the technology is also crucial. As with any industry to which the use of Blockchain represents an opportunity for improvement, the risks to which the technology is susceptible must be clearly thought out and, to the extent possible, mitigated.
Despite the risks, it remains clear that the use of Blockchain in the industry will be beneficial and widely applied in the near future, as it presents an opportunity for insurers to be at the forefront of innovation and create a more attractive service offering. With the evolution of the sector and impending shift in roles across the insurance value chain, the willingness of insurers to adapt will determine whether they are able to reap the full extent of the benefits made possible by the technology.
This piece forms part of Camilleri Preziosi’s ‘Beyond Blockchain’ weekly series, in which members of the firm’s Blockchain and Fintech teams map out how the landscape has evolved since the ‘Unravelling Blockchain’ series published earlier this year. For further information, please contact us firstname.lastname@example.org.