The strategic business value of blockchain in Insurance Industry
Many enterprises actualize the strategic business value of blockchain after applying this technology in their business. So what are the true strategic business value of blockchain that we can use to apply in our business field? Let’s find out.
Core technology leverages of blockchain
Blockchain technology asserts its own value based on its features: decentralization, immutability, security, transparency and traceability.
- Decentralization: not controlled by a central authority, but contributed, validated and controlled by multiple entities; individual fully controls and decides which data and to whom they want share with.
- Immutability: It has the linear feature: new block is validated and added to the “end” of the previous block, building “chain” of data.
- Security: using cryptography to achieve data security, essentially the hash function to validate transactions; to one specific input data, there is only one fixed output (hash). This means that it’s nearly impossible to change input data without leaving the trace.
- Transparency: the blockchain database is open to every network users. They have the ability to access, view, read, and write their contents and relevant details (access ability based on which type of blockchain platform are being used).
The strategic business value of blockchain: Use case
Blockchain technology potentially makes sense in separate areas but in some areas it might not make any sense at all. Your industry and business model decide whether you should bring blockchain technology to your business.
Take the insurance industry as an example. The blockchain, along with other emerging technologies, has deeply transformed how the insurers, insurees, and agents work together.
As recorded by a Deloitte’s survey, 23% of business leaders when being asked about blockchain technology said that they expect it to help strengthen their system’s security, reduce risks, and contemporarily increase their customer experience. Here’s how they can make this urgency come true:
1. Reduce fraud and abuse
Fraud is an intentional deception or misrepresentation of fact that can result in unauthorized benefit or payment (e.g. someone submit claims for services not provided or used. Abuse means actions that are improper, inappropriate, outside acceptable standards of professional conduct or medically unnecessary (e.g. failure to maintain adequate medical or financial records), according to Health Net Federal Services.
When using private blockchain in the insurance ecosystem, all user information is stored authentically and permanently on blockchain database. Data can be used to analyze and predict user’s fraud behaviors from their transaction history faster and more conveniently.
2. Speed up process
We all know that the insurance industry requires a lot of paperwork. It’s easy to lose or miss a single document, which leads to serious consequences in processing claims. Using decentralized and distributed databases, insurance companies will accelerate the progress of updating user information.
With smart contracts, a set of conditions is created. Through database, records of agreements, transactions and other necessary information are automatically collected. As soon as these conditions are met, the terms of insurance agreement are implemented immediately.
3. Increase customer interaction and trust
In blockchain network, not only enterprises but their customers can control their data and how to use them.
- Insurance companies can use this data to analyze customer behaviors. After knowing customer habits and health histories, it’s easier for companies to bring more new ideas to provide better services and get their engagement and loyalty.
- To customers, if they know what’s happening to their information and required procedure, they’ll proactively know what to do and give more trust.
4. Cost deduction and more revenue
Blockchain helps insurance companies to cut off the costs of each claim denial, unnecessary human labor or costs of security issues.
Besides, due to faster processing and gaining more trust and satisfaction from customers, there’s an increase in winning rate, thereby increasing more revenue to industry.
The akaChain blockchain platform
With industry expertise, akaChain helped many insurers to create a frictionless network between hospitals, insurers, insurees, and agents, enabling seamless information exchange and simplifying the process. The outcome is satisfactory for our customers: blockchain, by facilitating the connection between parties, improves the efficiency and accuracy of the data exchange, shortens the turnaround time at discharge, enabling the customer-centric services with faster cashless claim, transparency, and privacy. Explore more at Use Case: Insurance Solution.
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