BLOCKCHAIN IS THE FUTURE OF INSURANCE SECTOR, WRITES BAJAJ ALLIANZ GENERAL INSURANCE HEAD

Author: Jagdish Kumar, India

With insurance companies looking to cut risk on false claims, Blockchain technology can definitely solve this problem, writes, Bajaj Allianz General Insurance Head – Operations & Customer Service KV Dipu.

In an article published on a technology website, Dipu said that Blockchain technology has a potential to minimize risk to insurer as well as increase the speed, accuracy and transparency of our processes.

Speaking that Blockchain technology that is developed on a decentralized platform, it provides a simple premise for solving the financial and logistical problems.

Blockchain is useful, where multiple parties need to be involved to complete transactions, confidential data is to be shared, transaction costs are high and transparency is paramount, such as insurance. It has potential benefits in terms of revenue, cost savings, and efficiencies.

Dipu wrote that underwriters in future will be able to unleash the power of peer to peer networks and underwrite better using AI and analytics.

It may be noted that many banks have already started experimenting on Blockchain technology on a pilot form. But the final role out will only be possible after the government comes up with a regulation for the sector.

According to the Brookings Institute estimated global size of the sharing economy will be around $330 billion by 2025, as against $15 billion today.

Many companies including Uber, Lyft, Airbnb, ZipCar, others are the perfect example of sharing economy.

Dipu also underlined that companies that are in retails business can benefit the most with this technology as customers are now moving out the traditional method of buying insurance and opting for online insurance.

Insurance companies can collaborate with larger ecosystems to make life easier for customers. It can not only help in seamless auto reporting of claims, but also validating the actual claim and paying the customer in a pre-defined account/mode.

According to Dipu, fraud prevention is the most critical part of Blockchain. Sharing of data among multiple third parties can prevent fraud before it happens, especially in extraordinary circumstances (e.g. catastrophic loss).

Blockchain technology also provide validation of provenance of valuable items helpful against high severity claims (esp. in high net worth market).

The sector ranked sixth in terms of Blockchain-specific portion investment after Big Data, IoT, AI and robotics.

Even though insurance was the largest sector in investment during 2017, it share increased by 26%, as  compared to the last year period.

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