Blockchain was all the rage in new tech only a few years ago as Bitcoin grew in popularity. It wasn’t the cryptocurrency itself that made the technology so appealing, but rather that specific blockchain ledger technology. Cryptocurrencies, such as Bitcoin, only proved how well blockchain could work in theory. Though the blockchain rage has died down since then, one industry it proves to make major impacts in is in the insurance and medical industries. This is now being dubbed Insuretech.
Insuretech has become such a growing market segment that research firm MarketAandMarket projects growth upwards of 84.9%, or a value of more than $1.4 billion, by the end of 2023. Another study performed in 2018 by Capgemini and Efma named blockchain as one of the primary technologies to disrupt insurance business alongside AI and wearables.
Why is blockchain technology making such a big impact in the insurance business?
One reason might be that this distributed ledger system prevents mistakes. For instance, baggage claim companies can easily track claims from the beginning to end of the process without any errors. Every piece of the chain in the claim is easily tracked and verified within a blockchain system.
Blockchain is also making great strides in preventing insurance fraud. Insurance fraud is very relevant in developed countries. Often insurance claims are made to different insurance companies for the same incident. Currently, it’s very difficult for competing insurance companies to track and verify claims made by the same individual. A universal ledger system, along with federal standards, could allow competing insurance companies to track claims through a unified ledger that all companies have access to. This would eliminate this type of insurance fraud.
Blockchain tech could be used in the healthcare industry to not only share patient medical data between providers but better restrict who has access to that data. The United States has very strict laws regarding the sharing of personal medical information. HIPPA regulations can impose heavy fines on health care practices if these laws aren’t followed. Any technology that would make this process easier, more secure, and more accurate will be welcomed.
That’s not to say that the Insuretech revolution will happen tomorrow. Blockchain technologies still face an upward battle in the industry. Utilizing blockchain, especially between competing businesses, is going to require that all stakeholders buy-in to the tech and agree to share records. The insurance industry is also under much higher scrutiny compared to other industries. Regulations and laws are going to have to be passed allowing its use. That won’t happen quickly; governments move slowly to enact such changes.
At the moment blockchain Insuretech seems more aspirational than anything else. Though it is already being used in some fields to automate the paperwork process, it still has a long way to go before blockchain becomes an industry standard.