Capgemini Consulting estimates that over a third of insurance consumers worldwide currently utilize insurtech products. The traditional insurance industry has changed dramatically in recent years and will continue to do so in the future. For insurers and their clients, artificial intelligence and, in particular, blockchain technology will become increasingly important. Why? With legacy environments that have not evolved in years and consumer expectations at an all-time high, the industry is ripe for disruption.
How will autonomous blockchain technology influence the insurance sector?
Often, blockchain automation leads to increased efficiency. According to Gartner, it was one of the most disruptive technologies in 2020. Invariably, smart contracts save insurers time and money by safely automating various policy formulation, onboarding, and maintenance processes.
In addition, blockchain technology will undoubtedly improve insurer communication. By offering a safe means of file interchange, it has the potential to obliterate siloed data stores.
Customers in a blockchain-powered insurance market may likewise expect more transparency from their coverage. Also, blockchain technology can ensure that consumers receive full transparency around their transactions.
Further, with blockchain technology, insurers can increase automation instantaneously.
Smart contracts do more than just augment transaction transparency. They can also enhance insurance workflow operational efficiencies.
A smart contract can facilitate and enforce execution since it stores the contract’s immutable terms. Insurers can use the blockchain to simplify insurance claims systems since blockchain automatically enforces the conditions of a smart contract. Without question, automation is a critical component of blockchain technology. For instance, insurers can use blockchain technology to rapidly validate damaged assets during the First Notice of Loss process.
Moreover, insurers can streamline and track insurance payments more easily. When payment information is recorded in a blockchain database, it can expedite multiple payments to various parties in line with the smart contract and determination of responsibility.
In aggregate, blockchain technology has the potential to save insurance firms substantial amounts of time, effort, and expenses by decreasing administrative overhead and redundancies.
How can blockchain technology improve the insurance industry?
Blockchain can record transactions and track network assets using decentralized ledger technology. A tangible thing (cash, a house, plot of land, or a vehicle) might be intangible (copyrights, intellectual property, branding, and patents). You can monitor and sell almost anything on a blockchain network.
What is a “block”? Each transaction is logged as a “block” of data in its entirety.
These interactions involve the exchange of a physical (a product) or intangible (a service). The data block can store any information, such as who, what, when, where, and how much, as well as a product’s state, such as its temperature. Transactions are also permanently linked together in a blockchain.
Additionally, smart contracts can convert paper contracts into programmable code, allowing for the automation of claims processing and calculating insurance liabilities for all parties. Traditionally, claims procedures entail several manual steps, beginning with the client alerting the insurance company of the occurrence, either online or by phone.
Unquestionably, local adjusters struggle to keep up with many claims when a significant natural catastrophe strikes an area. Surveyor availability may also bottleneck claims processing systems. On the other hand, with reliable data, blockchain technology can help to speed up claim processing by automating some of the procedures.
Thus, blockchain technology is a forward-thinking solution for sharing and storing insurance data. It facilitates the recording of instantaneous, shareable, and transparent data on an immutable ledger accessible only to network members with authorization. A blockchain network can also track accounts, orders, payments, and production, among other things.
Because authorized end-users share a single version of the truth, you can view all aspects of a transaction from start to finish, leveraging increased data confidence as well as additional efficiencies and opportunities.
How can artificial intelligence help to modernize insurance?
It goes without saying that the insurance sector is fundamentally based on a legal responsibility to reimburse policyholders in the event of a loss. However, artificial intelligence (AI) can help the insurance industry move from redundant data collection to effective data processing.
Detecting various frauds throughout the insurance claims management process has been highly stressful for insurance companies over the years, with continuing challenges and a highly regulated environment.
Keeping up with the daily creation of insurance data and the need to extract insight from it drives the use of clever and creative technologies capable of interpreting information beyond keyword matching. This will require the deployment of cognitive technologies.
Insurance is ripe as an application case for AI and cognitive technology due to millions of claims, client inquiries, and enormous volumes of varied data.
Therefore, AI can enhance reforms in the industry, including:
Rapid and personalized claims settlements: Online interfaces and virtual claims adjusters can drive faster settling and paying claims after an accident while simultaneously lowering the risk of fraud. Customers can also choose who pays their claims using their premiums (i.e.peer-to-peer (P2P) insurance).
Internet of Things (IoT) sensors: These can provide customized data to pricing systems, allowing safer drivers to pay less for car insurance (known as usage-based insurance) and healthier people to pay less for health insurance (known as population-based insurance).
A hyper-personalized customer experience and coverage: AI enables a frictionless and automated purchase experience by employing chatbots to access consumers’ geographic and social data to create tailored interactions. End-users can also tailor coverage with carriers for certain goods and occasions (known as on-demand insurance).
In the digital era, the insurance sector is seeing significant disruption as new entrants use AI, blockchain, IoT, and other technologies to reimagine client insurance experiences. These innovative solutions have the potential to challenge established competitors over the long term. Further, incumbents can use AI and blockchain to leverage substantial competitive advantage over newcomers due to their established extensive expertise, customer connections, and valuable data from their partners, operations, and environment.
Take implementation slowly
To solidify the success of AI and blockchain technology, begin by including relevant stakeholders within the organization such as those who have authority to approve budgets, the IT department, adjusters, and more. Set and manage expectations by telling your team about AI and blockchain’s strengths and limitations. When presenting results timelines, keep in mind that machine learning takes time to master.
Nonetheless, insurers that employ AI and blockchain-based solutions may access vast amounts of precise data on interactions inside their ecosystem. The insight gathered from this data is extremely useful in developing and pricing new goods. In addition, keep in mind that AI and blockchain systems thrive on high-quality data, so amass a bank of reliable, up-to-date, and, most importantly, relevant data. Finally, test these technologies in a real-world setting to ensure that everything works as desired.