CO - Finnovation

Blockchain for Claim Management in Insurance Industry

Blockchain for Claim Management in Insurance Industry
Insurance industry has a vast potential for blockchain-driven innovations solving multiple pain points across the insurance value chain, owing to its reliance on disparate systems involving multiple participants with a high scope of data sharing.

Two predominant blockchain use cases and areas of applications in the insurance world: 

Policy administration and automated payout – with 30.3% and 21.2% of blockchain projects respectively. 
Claims management/verification, new product/platform development, and record keeping : These are the other key areas where insurance incumbents are developing blockchain applications.Claims management is among the most important areas of continuous development and innovation adoption. An estimated 5% to 10% of all claims are fraudulent. According to the FBI, the total cost of insurance fraud (non-health insurance) is estimated to be more than $40 billion per year. That means insurance fraud costs the average US family between $400 and $700 per year in the form of increased premiums.

According to R3, the solution is able to: 

• Create and maintain asset data from multiple parties; 

• Link data to policy contracts; to receive and act on information that results in a pricing or a business process change; 

• Connect client assets, transactions, and payments; 

• Capture and validate up-to-date first notification or loss data. 

R3 claims that Insurwave can provide three big benefits:

reduced costs,
revenue uplift,
and compliance.

All parties have real-time visibility into the location, condition, and safety of high-value assets moving around the world, which leads to more accurate, dynamic, and fair underwriting & pricing. Participants additionally realize operational savings from streamlining the work of large risk management, policy amendment, and claims processing staffs.

In April 2018, an alliance was formed: Cognizant and a consortium of Indian life insurers — comprising SBI Life Insurance, Max Life Insurance, Canara HSBC OBC Life Insurance, Edelweiss Tokio Life, IDBI Federal Life Insurance, Birla Sun Life Insurance, HDFC Life, Kotak Life, Tata AIA Life, PNB MetLife, IndiaFirst Life Insurance, ICICI Prudential Life Insurance, Bharti AXA, Aegon Life, and SUD (Star Union Dai-ichi) Life Insurance — announced that they have developed a blockchain solution to facilitate cross-company data sharing.

This is expected to enable the insurers to reduce the risk of data breaches, fraud and money laundering, while delivering superior experience to customers through improved process efficiency, better record-keeping, and accelerated turnaround time. Built on Corda, the solution is expected to help these insurers reduce their reliance on data intermediaries and aggregators in obtaining customer and policy details for a wide range of critical purposes, such as KYC due diligence, financial and medical underwriting, risk assessment, fraud detection, and regulatory compliance.
  • Ram Rastogi
    Ram Rastogi
    Consultant, CGAP

    Ram Rastogi is a career  banker  with over three decades of hand - on experience in the areas of banking and emerging payments domain with expansive domain knowledge in Mobile, Digital Payments, E Commerce, M-Commerce and EBPP. He was closely associated with State Bank’s strategies in the area of design and implementation of Payment systems - ATM Deployment, Debit cards, prepaid cards, Merchant Acquiring Business and Mobile Banking Service “State Bank Freedom”.

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