The blockchain’s decentralized ledger technology acts as a single point of truth. When a device joins the network, it is updated automatically. Encryption also secures the database, making it nearly impenetrable to threat actors.
Further, it is only used for appending and is spread over a permissioned or permissionless blockchain. Yet, many insurance companies still utilize the traditional filing method of paper and file cabinets. Thus, because this is a time-consuming process, recipients are unable to get their payments and settlements on time. It also prohibits digital interaction with the policyholder to change beneficiary information.
Fortunately, chatbots, improved “smart form technology,” fraud detection, blockchain, and artificial intelligence are now available to streamline claims processing. We’ll look at how blockchain and artificial intelligence can enhance claims processing workflows in this blog post, as well as some use cases.
Blockchain and AI Emerge as a Game-Changer for Insurance
Undoubtedly, the COVID-19-induced behavioral shifts have given the insurance industry a chance to enhance its capabilities and incorporate new technologies like blockchain.
Insurers and their customers might benefit substantially from blockchain technology in various areas, including claims administration and fraud detection, as well as reinsurance and peer-to-peer insurance. Through its digital hub role, blockchain innovation can also save a significant amount of paperwork, which helps to improve the overall customer experience.
Meanwhile, the decentralized nature of blockchain technology allows users to send and receive data securely and privately. As a result, insurers are better positioned to provide customers insurance products and services suited to their individual needs while driving cost savings.
The applications listed below are a few examples of how blockchain technology is used in three key industries:
- Claims processing. A distributed blockchain network enables all insurers to access the same data, lowering claim administration expenses quickly. If there is a low risk of fraud, claims can be processed more rapidly.
- KYC and onboarding. To fulfill KYC (know your customer) standards, insurance firms must acquire, authenticate, and check essential papers that confirm personal information such as a client’s name, address, date of birth, and health and economic situation to fulfill KYC (know your customer) standards. Due to the decentralized nature of a blockchain network, which is accessible to anybody with authorization, you can publicize all essential paperwork. Moreover, blockchain technology prevents post-processing manipulation by encrypting and linking records.
- Underwriting. In blockchain underwriting, external data might be utilized to reduce risk and provide semi-automated pricing. Automating and simplifying the underwriting process results in lower operational costs. Blockchains improve openness and confidence in the underwriting process by enabling consistent visibility across international programs.
Blockchain and AI for Claims Processing
How can insurers enhance the quality of claim evaluation, management, and administration? Well, artificial intelligence (AI) technologies make information systems more human-adaptive, which improves human-computer interaction. By making claims processing faster, more precise, and error-free, AI gives insurers a competitive advantage. Insurers can also improve claim management in the following ways, including:
- In the event of a loss notice, providing a real-time question-and-answer service.
- Computerized damage assessment and pre-screening of claims.
- Improved data analytics to automatically detect claims fraud.
- Calculating the number of claims ready for submission.
- Augmenting loss analysis.
By implementing the right technologies, insurance purchasing can become less complicated, requiring less involvement from both the insurer and the consumer. Thanks to AI algorithms that generate risk profiles based on an individual’s behavior, insurers can reduce the time it takes to get a vehicle, business, or life insurance coverage to minutes, if not seconds.
Traditional, human-based methods of determining a loss may eventually be replaced by IoT sensors and other data-collection technologies, such as drones. Invariably, Internet of Things (IoT) devices in the home will expand to monitor water levels, temperature, and other key risk indicators in advance and alert tenants and insurers to possible issues.
The bulk of policyholder interactions can also be handled by automated customer service applications that use self-learning scripts to link to claims, fraud, medical service, and policy systems. Because of the rapid resolution time, most claims can be settled in minutes rather than days or weeks.
Furthermore, blockchain technology enables valid claims to be reimbursed instantly rather than over days or weeks. There are three different advantages of using smart contracts to manage claims:
- Traditional human-assisted policyholder evaluation and payment methods may be phased out in favor of smart contracts that automate the process.
- Because blockchain transactions are entirely automated and do not require third-party authorization, they are more cost-effective and accurate to administer.
- The blockchain eliminates fraud while enhancing data transparency and cross-sector collaboration.
Invariably, a blockchain network can easily manage external data collected through IoT sensors or mobile devices. Decentralization can process data in near-real-time from a variety of inputs. Thus, claims are processed quickly and in minutes since the terms of coverage are specified in an open smart contract, and all data required to complete the evaluation is kept digitally.
Visualize the Future of Insurance
Insurers may quickly obtain massive volumes of data about their own ecosystem’s activities using blockchain-based solutions. As a result, customers, brokers, re-insurers, sellers, bankers, and regulatory agencies can benefit from blockchain-based networks, which provide data security while broadening the ecosystem of all participants by allowing access to customers, brokers, and re-insurers, bankers, and regulatory agencies across the insurance ecosystem. Finally, pushing innovation helps to foster it.