Insurers have always been perceived as more conservative technology adopters – and it is no different with blockchain, with concerns about disruption, risk and cost serving as deterrents. Most insurers have therefore adopted the wait-and-watch strategy, instead of jumping right in with large blockchain investments.
Blockchain technology can help make the claims process transparent and responsive for all stakeholders. Smart contracts that replace legalese and hard-to-understand terms and conditions with cause-and-effect clauses can dramatically improve transparency and help gain customer trust. Once the contract has been recorded on a blockchain, and claims information periodically updated, monitoring this becomes much simpler.
Within blockchain, smart contracts can drive a P2P or crowdfunded insurance model. The smart contract can streamline insurance payouts in an automated and transparent manner, once the claim has been auto-verified. As this is a self-governing body with minimal overheads, at the end of each year, any extra capital can be redistributed among policyholders.