Insurance industry provides the best scenarios for blockchain applications
The compensation for the flight delay reaches the passenger’s bank account once the plane landed; the indemnity for the accident arrives not long after it is reported; the insurance policy is no longer merely a protection for the family, but also an transferable asset… these positive changes in the insurance industry are all brought by blockchain applications.
How will blockchain transform the insurance industry? To answer this question, we interviewed William Bu, the founder and director of insChain, a former actuary and an expert on blockchain. In his opinion, the insurance industry provides the best scenario for blockchain applications.
Connecting the insurance industry to blockchain
“Everyday we are racing against time. If blockchain applications succeed and gain popularity in the next two years, a world of possibility will be opened up.” said William Bu. He also believes that blockchain will transform the relations of production in the insurance industry, and will give birth to a variety of insurance in the future.
Blockchain changes the way trust is built. For one thing, it uses data technology to help participants reach a consensus without trusting each other necessarily. For another, the use of smart contract reduces the risks associated with human interventions.
The time and energy consumed by data authentication process is the main reason behind the low efficiency of the traditional insurance model. With the help of blockchain and smart contract, each claim can be traced and fraud prevented. The whole process will also become increasingly frictionless, transparent and automated.
Therefore, a batch of insurance companies and insurtech companies introduced blockchain to their businesses as early as two to three years ago. In April 2016, Ping An Insurance joined R3 Blockchain Consortium. Later in July, Sunshine Insurance became the first player to put mainstream financial asset onto blockchain, offering a new product featuring“blockchain+flight accident insurance”. In 2017, Shanghai Insurance Exchange completed a blockchain data trial in collaboration with nine insurers. Zhong An also attaches great importance to this thriving technology, applying blockchain to animal husbandry.
There has been a growing number of use cases of blockchain within the industry, and blockchain’s unique advantages in protecting policyholders’ privacy, deploying smart contract, tracking claims, and improving claim settlement services are gradually felt.
Blockchain: transforming the insurance industry
Currently, blockchain is used to solve the industry’s pain points. Yet this is just the tip of the iceberg. In the future, blockchain will have a more profound influence on the insurance industry. According to McKinsey’s survey, blockchain solutions for the insurance industry will reach their full potential in the next five years. Throughout human history, technological revolutions have brought significant development and changes to various fields. The blockchain revolution is the next one in the making, which will reimagine the relationship between insurers and policyholders. For instance, each individual faces different risks, which lead to different considerations. Therefore, customers require personalized pricing mechanism and products, which can be realized with blockchain’s immutability.
According to William Bu, insChain is building “a customizable and scalable insurance ecosystem based on blockchain, Internet of Things and artificial intelligence.”
The procedures and rules of underwriting and settlement are coded into the insChain contracts on blockchain. When the condition is met, the contract will be executed automatically. The insChain contract helps third-party insurers provide customized products to their clients, offering various services including products R&D, policyholder’s identity verification, sales, underwriting, settlement, accounting and life settlement.
William Bu deemed the nature of insurance as the aggregation and diversification of risks. In fact, insurance came into existence in different forms long before the emergence of modern insurance companies. Not only will blockchain bring insurance back to its essence, but also introduce a new type of production and organization distinct from the traditional insurance company.
On insChain’s Platform, users can form self-organizing P2P mutual help community, whose parameters and rules are highly customized. Capital flows are transparent, and underwriting, verification and the establishment of mutual help fund will be put to vote among the group members, and the decision will be executed automatically.
In cooperation with a charity foundation, insChain has launched an online mutual help program, which has attracted tens of thousands of participants. Within this program, the uses and whereabouts of the capital are traceable and transparent, and all the data is tamper-proof.
insChain has received tens of millions of dollars from investors at home and abroad, and it is working assiduously on the R&D of the insChain platform.