Blockchain has the potential to significantly impact the insurance industry by increasing trust, transparency, and efficiency. Nearly 80% of insurance executives are adopting or piloting blockchain technology. Blockchain allows for independently verifiable data sharing between insurers and customers. It can automate complex processes like claims, reducing costs and increasing speeds. Use cases include fraud prevention through shared data access, streamlined claims management using smart contracts, and boosted transparency and trust with an immutable shared ledger. Over time, blockchain may transform the insurance industry and help meet customer demands for transparency, speed and flexibility.

1. Blockchain and it’s
importance on
Insurance Industry
ARTIVATIC.AI

2. Introduction • Do you know that nearly 80% of insurance
executives have either already adopted or
planning to pilot blockchain technology
across their business units?.

3. 3
Well, the level of trust, transparency, and
immutability that blockchain (distributed ledger
technology) provides is impeccable. Blockchain
offers an independently verifiable dataset so that
insurers, as well as customers, need not suffer from
decisions based on inappropriate/incomplete
information.
In the instances of travel insurance,
blockchain-based systems use external
data sources to validate whether a
flight was missed or cancelled.
Accordingly, insurers can decide on
processing refund claims.
Well, blockchain can handle even
more complex situations of road
accidents by accurately determining
the vehicle or human fault.

4. Save Time
Transaction
time from
days to near
instantaneous
Reduce
cost
Overheads and
cost of
intermediaries
Mitigation
Risk
Safeguard
against
tampering,
fraud & cyber
crime
Increase
trust
Through
shared
processes and
recordkeeping

5. What is Blockchain?
Blockchain is a distributed ledger that is broadly discussed as a technology with huge
innovation potential in all areas of financial services. To date, it is largely in the banking
arena where blockchain use cases have been identified.
However, the blockchain technology also offers potential use cases for insurers that include
innovating insurance products and services for growth, increasing effectiveness in fraud
detection and pricing, and reducing administrative cost. In these application areas insurers
could address some of the main challenges they are facing today – such as limited growth in
mature markets and cost reduction pressures.

7. While implementation spans
different layers – from
infrastructure to generic
platforms to specific
applications – a blockchain
solution, without requiring
central coordination,
generally builds on a set of
four characteristics:
•New data is packed into blocks that can only be added to the blockchain after
consensus is reached on the validity of the action. This allows participants to place
trust in their transactions even in the absence of a central authority, thus enabling
disintermediation.
Decentralized validation
•The blockchain is continuously replicated on all or at least a group of nodes in the
network. As a result, no single point of failure exists.
Redundancy
•Each stored block is linked to its previous block in the chain, making it almost
impossible for hackers to subsequently change blocks, as they would have to
manipulate any succeeding block plus the majority of their replications.
Immutable storage
•Digital signatures based on pairs of cryptographic private and public keys put
network participants in a position to authenticate which participant initiated a
transaction, owns an asset, signed a (smart) contract, or registered data in the
blockchain
Encryption

8. USE CASES IN BLOCKCHAIN
In the banking industry, several blockchain use cases are currently being implemented,
ranging from customer-facing payment technology to trading and exchange services.
While the insurance industry (in terms of technology adoption) lags behind banking, it is
nevertheless uniquely positioned to benefit from blockchain technology. Blockchain can
address the competitive challenges many incumbents face, including poor customer
engagement, limited growth in mature markets, and the trends of digitization.

9. Fraud and abuse prevention
Fraud costs the insurance industry monstrous amounts of
money, mostly because it’s impossible to detect fraudulent
activities with regular methods based on the use of publicly
available data and private data sources. As a result, the
accumulated data is usually fragmented due to legal
constraints accompanying personally identifiable
information.
When data is stored on a blockchain-based ledger, it’s
secured with cryptographic signatures and granular
permission settings. It means that all the parties can share
data and verify its authenticity without revealing sensitive
information. A shared decentralized ledger facilitates
historic data consolidation and helps companies spot
suspicious patterns, such as:
Multiple processing
of the same
claim
An insurance
policy’s ownership
manipulation
Insurance sold by
unlicensed brokers

10. Boosted transparency and trust
Insurance companies are called walled gardens
for a reason. Customers have little chance to see
how their data is managed. For example, they
will never know that their data is shared with
third parties. It’s no wonder that customers grow
distrustful of insurance companies, particularly
when facing long claim processing times or
receiving claim denials—while the cost of
premiums is ever-increasing.
However, when multiple insurance companies
choose to contribute data to the same
decentralized and shared ledger, it can lead to
three big advantages:
Insurance companies can build more
complete customer profiles and eliminate
duplicate records. As the data in the
blockchain ledger is immutable, the
insurance companies won’t doubt its
authenticity.
Customers will get visibility into what data
their insurers have on them, and how this
data is processed. Plus, when blockchain is
combined with machine learning and AI,
claim processing can be automated, thus
accelerating pay-outs.
Blockchain helps automatically verify third-
party claims or payments made through
personal devices. Further on, the insurance
company will be able to see all those
transactions reflected on the blockchain.

11. Streamlined claim management
Selling and managing insurance policies is a labor-
intensive process. In the context of high
competition, insurance companies that stick to
slow and paperwork-heavy traditional approaches
lose to more digitally savvy competitors. The latter
are able to offer lower premiums by automating
claim management. Some of the processes can be
automated by means of smart contracts which are
getting popular for property and casualty
insurance. When used in combination with
connected devices, a smart contract can trigger
automatic claim processing when, for example,
anti-theft sensors go off under certain pre-
programmed conditions.
The best way to reach this balance is to create a
blockchain-based ecosystem with a considerable
number of high-profile participants.
Once new records are added to the blockchain,
the distributed ledger technology helps update
and validate the data against other records in
the network, which significantly reduces
operating costs, at the same time providing high
security for transactions.
The distributed ledger technology also deals with
one more factor that slows down claim
management—the need for bank transfers.
As a rule, customers don’t see pay-outs in their
accounts for weeks. However, when banks and
insurers have a single system they trust, the pay-
outs can be processed without considerable
delays.

12. Blockchain is a decisive factor in transforming the insurance industry and helping it break free from outdated traditions. The
need for innovation in insurance is critical—customers are craving transparency, speed and cost flexibility. Blockchain is
designed to deliver on these desires and meet all the participants’ particular expectations.
When there’s little to no chance of fraud, people will trust their insurance agents more. When complex policy claims are
processed 10x faster, there’s no room for friction. At the same time, when claim processing is automated, insurers have more
possibilities to be flexible with pricing.
What’s more, the covered use cases are just the beginning. With more blockchain-based applications going live and more
companies entering into collaborations, the insurance industry can grow its tech ecosystem to create better products for case
management, audit, and risk modeling.
ROAD AHEAD

13. Thank You
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