By Matej Michalko
Insurance is a legacy industry that remains relatively unchanged by software. While transport or financial management have undergone significant transformation because of increased competition and new technology, the insurance industry has survived largely unscathed. Is this something blockchain can change?
The insurance issue
Insurance – it is one of the few things that seem optional until disaster strikes. Financial or material coverage against unforeseen circumstances is vital when it comes to protecting what is yours. Be it home, content, health or travel insurance, the industry collects premiums and redistributes the money if and when needed.
But herein lies the problem: insurance is littered with lies. Fake claims, fraudulent cases and low trust are some of the issues which continue to plague the industry. It is tough to put a figure on fraud losses to insurance companies, but industry insiders conservatively estimate $80 billion a year is paid out to incorrect claims across all lines of insurance in North America.
Fraud accounts for 5 to 10 percent of claims costs for U.S. and Canadian insurers. Nearly one-third of insurers (32 percent) say fraud was as high as 20 percent of claims costs. Further, the vast amount of third-party coverers only serve to make processes even slower. Clearly, the industry needs to streamline and verify true claims – and nothing is much better at streamlining and verifying than blockchain.