Making contracts automatically, reducing costs and storing the information is only a little part of what distributed ledger technology offers
The demanding style of work of insurance companies and the importance of providing a better service are the aspects of competition between those institutions. These companies are looking for an ingredient able to make a difference and executes transactions quickly and safely.
Improving the relations with customers, reducing expenses and saving time are the main advantages pursued by insurers to attract more and more users. According to a study made by Markets and Markets, which offers market research reports and custom research services, blockchain technology could be the answer.
Smart contracts came to certify much more than the purchase and sale of cryptocurrencies. Thanks to the advancement of technology, contracts can be made automatically, efficiently and contemplating the aspects that both parties desire, all of this at the same time.
The analysis of Markets and Markets estimates that the use of blockchain technology will move almost USD 1,394 million in the insurance sector by the year 2023. This figure would imply an annual growth rate of 84.9% from 2018, when the figure was 65 million dollars. According to the institution, the increase in profits will be due to these companies need to have transparent and reliable systems.
The Contributions of Blockchain
Blockchain platforms are a system of exchange of digital transactions through a huge database in which all operations are recorded. This mechanism allows monitoring transactions, avoiding excessive procedures and reducing the number of people involved in the process.
For these reasons, Markets foresees that companies related to deaths and identities services will adopt blockchain technology, as well as smart contracts.
Thanks to smart contracts it is possible to program and execute a contract using computer codes, which contain the criteria previously defined by the parties. If the content is correct, the contract is launched automatically.
Similarly, with these technology insurers will be able to know the identity of the clients that conduct the transactions, as well as the date and time of issue of the policy. This would help reduce the fraud rate and allow an easy management of the platform.
The report explains that the use of this technology will reduce the costs of verification, execution and arbitration. “It is expected that the application of identity management and fraud detection will be the segment with the highest income generation for insurers until the year 2023, since blockchain technology helps validate the authenticity, ownership and origin of the data through the supply chain”, the article explained.
A total of 15 insurers from all the world, including Aegon, Zurich and Allianz, allied themselves through the Blockchain Insurance Industry Initiative (B3i), in order to study the advantages blockchain can bring to the insurance sector.
The interest of these companies remains. European companies such as Allianz used this technology to encourage trading in catastrophe bonds, which transfer the risk of natural disasters to investors. The radius of action of blockchain seems to be increasingly broad and does not stop surprising.
By María Rodríguez
