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Blockchain in Insurance: How Will it Change the Industry?

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Hemendra Singh


Blockchain technology is all set for exploration by insurers. The traditional insurance industry depends on paper contracts. Furthermore, people need to call via phone to learn about new policies. Also, the chances of errors are high, and the manually collected data can be lost or misinterpreted. And here comes, Blockchain in insurance comes into the picture where you can transform the traditional insurance industry

Blockchain is a trendy technology buzzword, a digital ledger carrying transactional records termed a block in different databases called the chain in a linked network via nodes.

In this article, you will get acquainted with how an intelligent insurer can use Blockchain technology to change their insurance business. Let’s begin: 

Benefits of Blockchain in the Insurance Industry

Insurance blockchain offers many perks, such as cost-effective, transparent, trustworthy, and long-lasting solutions. But that’s not all. Following are some more benefits of implementing blockchain technology in the insurance industry. Let’s take a glance at it. 

1. Eases Claims Processing 

Blockchain helps automatic claims by verifying documents between reinsurers and companies. Moreover, it can also help to automate transactions between two or more parties for claims. This can help insurance companies by reducing administrative expenses.

2. Improve Efficiency

Blockchain can help with efficiency gains. It enables quick payments and transparency while securely verifying data sharing to different parties. As we know, most insurance procedures are manual, and blockchain technology can assist with less paperwork of insurance contracts for a good customer experience

3. Builds Trust

When transactions of insurance contracts are secure, verifiable, and authentic, it offers a sense of trust among the transacting parties. Luckily, you can avail all these benefits from cryptography in the Blockchain.

4. Supports Smart Contracts

Smart contracts are one of the key ways that blockchain technology will help the insurance sector. Over 1,700 of the 3,000 counties in the US have an e-recording platform. Many banks are implementing technologies that turn their paper documents into e-docs. Smart contracts are becoming more prevalent with the widespread acceptance of this technology.

5. Reduce Administrative Cost

Blockchain technology helps users with automated verification of policyholder identity, contract validity checks, auditable claim registration, and data from third parties. Blockchain technology can reduce costs by 15% to 25%.

How can Blockchain Impact the Insurance Industry?

It is ideal to say that Blockchain in insurance help to reduce the cost of administration, claims, product development, and underwriting. Initial areas taken for crypto insurance companies include applying Blockchain to create automation in paying returns. In addition, blockchain creates smart contracts between insurers and companies, offering transparency and reliability. 

Let’s check out in detail how the insurance industry can be transformed by blockchain.

1. Impact on Registration of Warranties and Expensive Items

Blockchain offers reliable product details for the advantage of stakeholders. Further, it provides industry-wide efforts to reduce fraudulent claims. Also, it can track item claims and ownership in real-time.

2. Impact on AML/KYC Methods 

Blockchain secures customer information that can be repositories shared among companies. Also, using Blockchain reduces the risk of error and duplicacy of KYC work. Furthermore, it aids in enhancing the visibility of clients’ activities across companies and offering better adherence.

3. Impact on Index-Based Insurance 

Index-based insurance or Parametric insurance provides pre-listed payments as per trigger events. Blockchain can help in automating entire index-based insurance parts. Further, blockchain technology can clear and manage all transactions, excluding manual intervention. It also eases crisis bonds and related insurance claims, flight cancellation, delay, food crop insurance, and many more.

4. Impact On Claim Handling

Using Blockchain in insurance, you can create a solid record of claims. It further grants insurance owners you access to their data freely. Also, it has data silos (vaults) to lower claims fraud. 

5. Impact On Insurance Distribution 

Blockchain lets you make transactions for claims quickly. Further, Blockchain aligns the actions of different parties at fair costs. It also gives users direct access to multiple carriers and lets them handle other policies on a single platform.

6. Impact on Data Collection and Storage

In the Blockchain, data is stored in blocks; once it is stored, it cannot be changed. Blockchain can collect data with the help of other technologies like the Internet of Things (IoT) and Artificial Intelligence (AI). For instance, a company may offer a low premium for health insurance based on factors like oxygen saturation, sleep duration, etc. IoT devices gather data, which is then kept on a blockchain. Finally, the business will use AI to analyze the data stored on the Blockchain and determine the insurance premium.

Best Use-Cases of Blockchain Applications in the Insurance Industry

Blockchain technology offers clear and detailed information to innovative insurers and customers through a valid database to make the right decision. Let’s look at real-life blockchain use cases in the insurance industry to leverage technology benefits.

1. Fraud Detection

Despite complete digitalization in many developed economies like the US, a high level of insurance fraud takes place. For instance, there is a loss of $40+ Billion a year through fraud across non-health insurance.

Luckily, Blockchain in insurance ensures every transaction made on the ledger is permanent and unchangeable. This creates a hurdle for any fraudster to interrupt Blockchain data. This further assists smart insurers in detecting fraud and preventing it on the spot. 

2. Reinsurance

As per PwC stats, reinsurance companies can save up to $5 to $10 Billion using Blockchain. Reinsurance or wholesale insurance means insurance to many insurers. Today, reinsurance industries mainly focus on increasing their overall efficiencies to enjoy higher profits in the market. Blockchain can make the insurance process easy for multiple users (insurers) by eliminating the need for various data filling and task duplication.  

Another big win of blockchain smart contracts for insurance and insurance is “full transparency.” When all risks underlie a blockchain, these can easily be collected onto a reinsurance blockchain. This further ensures all data, transitions, and documents flow into their insurance. 

3. On-Demand Insurance

Blockchain includes records (ledger entries) that can make processing on-demand insurance easy. Flexible insurance, where insurers can enter or exit their insurance policies in a single click, is called ‘on-demand insurance.’

Blockchain, a digital records technology, can cut all the extra requirements of on-demand insurance such as documents, buyer records, risk, costing, claims, and many more.

4. Ownership Proof and Asset Tracking

Property ownership records for vehicles or homes can be fed into the DLT (distributed ledger technology) system. Further, insurance companies have to build ownership of insured assets and then can track the transfer of their ownerships.

Blockchain allows innovative insurers to track the transactions of any valuable online assets via ‘tokenization,’ the process of tracking/transferring them.

5. Peer-To-Peer Insurance

Peer-to-peer insurance assets via blockchain technology have emerged in recent years. Using the P2P insurance model, you get a digital wallet where users put their amount in an escrow-kind account. Then, they use this amount for claims transactions rather than an old insurance payout process. 

Usually, groups of people not individually eligible for particular insurance coverage may process the decentralized trust of blockchain to ensure the group. They do so by sharing the risk distributed.  

6. Blockchain in Health & Life Insurance

Health & life insurers are one of the many player groups that are busy determining how blockchain technology can be used for the betterment of this field. The main questions include how blockchain technology can manage risk, reduce cost and improve user experience. 

In the healthcare sector, Blockchain assists researchers in discovering new codes. It achieves this by encouraging safe transfers of patient medical details, handling the drug supply chain, and clinical trials for better healthcare results.

7. Micro-insurance in Emerging Markets

Compared to an all-inclusive insurance policy, microinsurance protects against specific perils for recurring premium payments significantly less than regular insurance. However, microinsurance schemes occasionally may not appear financially viable because of the labor-intensive administrative procedures and high fees for small payments.

But with Blockchain, microinsurance initiatives in emerging markets can automate underwriting and claims handling based on predefined rules and makes it simple to facilitate payouts to insured individuals.

What are Smart Contracts in Insurance?

Smart contracts allow blockchain users to transfer valuable items transparently without middleman interference. The differences between physical and smart contracts for insurance are as follows: 

  • Physical contracts take 1 to 3 days, while smart contracts take a few minutes.
  • There’s a need for a middle man or lawyer in the physical contract. But, at the same time, a lawyer’s presence is not necessary for intelligent contracts.
  • Physical contracts are expensive, whereas intelligent contracts are pretty affordable.

In other words, smart contracts are programs recorded on a blockchain that works when pre-set terms and conditions are. Moreover, smart contracts are fed into the Blockchain to ensure they are secure, traceable, and transparent.

To Conclude

The insurance industry’s future is expected to reach USD 1,393.8 Million by the end of 2023. Blockchain is a better technology for the insurance sector as it offers transparent, clear, and secure transactions. Therefore, using Blockchain in insurance will bring cost savings and faster auditable and more accurate payouts.

Hemendra Singh

Hemendra Singh, Director and Co-founder of The NineHertz, IT Consulting Company. He is a tech enthusiast who helped SMEs for better decision-making in the field of Blockchain, NFT, Crypto, Metaverse.

Politics

Fintech Kennek raises $12.5M seed round to digitize lending

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Google eyed for $2 billion Anthropic deal after major Amazon play


London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.

According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.

The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:

“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”

The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:

“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”

The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.

The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.

Featured Image Credit: Photo from Kennek.io; Thank you!

Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

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Fortune 500’s race for generative AI breakthroughs

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Deanna Ritchie


As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.

Goldman Sachs’ Cautious Approach to Implementing Generative AI

In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.

According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.

One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.

To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.

Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.

Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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UK seizes web3 opportunity simplifying crypto regulations

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Deanna Ritchie


As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.

Streamlining Cryptocurrency Regulations for Innovation

To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.

The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.

Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.

The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.

Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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