We were having a discussion in the team on the potential of the blockchain technology to transform the insurance industry.
Here are some of the thoughts of our colleague @nikita-fuchs:
– Which areas/sub-sectors of insurance will see the biggest benefits from blockchain adoption?
Claim settlement is most likely what is going to benefit the most from the possibilities of smart contracts. Think of large areas affected by natural disasters, where people can proof the validity of their claim through their cryptographic identity and GPS coordinates.
– What are the practical obstacles holding back adoption?
Besides the lack of true scalability it’s difficulties with the end-user friendliness. But just as with the internet itself, we will have solutions for these issues in the upcomming years.
– Is the legal framework set up for blockchain to be adopted?
This depends on the industry. For insurances, blockchain technology is just a means of technology transfer. Complying with laws and regulations should not pose a considerable challenge.
– What will increased transparency (from the adoption of blockchain) do to improve the insurance industry?
Litigation costs are going to increase dramatically, as policyholders and insurance providers come to a consensus by design of the blockchain protocol automatically.
– If blockchain promises cost reduction and efficiency, how will pricing dynamics likely change?
The biggest impact the industry will see is that low-margin markets in remote areas will suddenly become profitable. The omission of bureaucracy through automation with blockchain technology will make offering flat fee tariffs for the poorer part of the world more attractive to insurance companies.
Looking forward to your thoughts on the matter!