Why insurance should care about blockchain

A recent report from Deloitte details the benefits and threats of blockchain technology in P&C insurance, from improving underwriting and reducing fraudulent claims to challenging the status quo.

“Given its ambitious potential to drive simplicity and efficiency through the establishment of new financial services infrastructure and processes, this technology is rapidly gathering momentum within the insurance industry,” notes the report, titled Blockchain In Insurance: Why should you care.

However, new insurance processes and business models built on blockchain could affect areas as diverse as information exchange, underwriting accuracy, fraud, complex liability assessments for reinsurance, and manual claims review and processing.

Benefits and threats

Within underwriting, blockchain technology can help reduce costs, improve risk assessment and enhance client onboarding — all of which can lead to improved risk profiling, efficient information exchange and automation through smart policies.

Similarly, the technology can fundamentally alter the claims processes, leading to simplified or automated submission, reduced losses from fraud, automated compliance and improved customer experience with no manual inspection.

Early adopters of blockchain are primarily investing in underwriting and claims processing, the report found.

For example, Ethereum-based insurer Etherisc, which is headquartered in Germany, has launched two products that eliminate the claims process altogether.

HurricaneGuard offers instant payouts to policyholders in the U.S., Puerto Rico and Germany based on the wind speed recorded by weather stations within a 50-kilometre radius of an insured’s home or business. And Etherisc’s new crop insurance product offers automated payouts based on drought or flood events as reported by government agencies.

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