Blockchain innovation is gradually taking hold in the insurance sector in an unprecedented way. Insurance giants and startups worldwide are attempting to use blockchain-based solutions to deal with operational inefficiencies of the insurance industry.
While digitization and technology have always existed in the insurance sector, blockchain innovation has emerged as rocket fuel for transformative change. In fact, behavioral shifts induced by COVID-19 have unfurled a promising opportunity for the insurance industry to upskill and adopt digital technologies like blockchain.
Blockchain technology has a lot to offer to both insurers and their insureds in different segments, from claims management and fraud detection to reinsurance and peer-to-peer insurance. Acting as a digital hub for all corporate transactions and data streams, blockchain innovation can reduce a lot of paperwork that worsens the customer experience.
Meanwhile, the decentralized nature of blockchain technology allows customers to share data securely and on a confidential basis. This further enables insurers to offer customer-centric insurance products and efficient services that are more streamlined and deliver greater value to clients.
Although there is limitless potential of blockchain technology in the insurance sector, the widespread adoption requires insurers to overcome significant legal and regulatory hurdles.
Moreover, the limitations of this technology in terms of standardization, scalability and security need to be addressed by insurers before taking any concrete action.
All in all, the industry-wide implementation of blockchain requires facilitating collaboration between insurers and technology leaders and shaping an encouraging regulatory environment. It is also crucial for industry players to closely follow the breakthroughs in blockchain technology and evaluate where the most promising blockchain application areas exist.