The increased breakthroughs in information technology have seen most industries transform from the paperwork that used to be time-consuming and insecure to paperless systems. Insurance firms have been striving to integrate technology in their service providers to ensure that customers have access to efficient, cost-effective, secure and diversify their services. Bitcoin technology is a type of digital currency that involves the use of block chain technology.
All Bitcoin transactions will be stored in a decentralized public ledger that is tamper proof. Such features will be playing a key role in creating trust among consumers of insurance services, and the technology is meant to ensure that there is a clear trail of purchase that prevents fraudulent transactions. Blockchain technology is a new type of consensus system that allows transactions to be quickly authenticated and securely maintained through cryptography, computational power, and network users, making the need for a trusted centralized authority irrelevant. Blockchain technology is used as a tool in managing massive, real-time data sets, ensuring guaranteed security, increased innovation, automation of processes, ensuring more utilization of peer-to-peer insurance and prevention of fraud in the insurance industry.
Reduce claim costs
The technology is tamper proof, and it creates room for insurance companies to provide smart contracts to their customers. Smart contracts are contracts that can automatically enforce terms when certain conditions arise. Smart contracts are more likely to ensure that insurance companies can manage claims in a transparent, responsive, and irrefutable manner. This will ensure that only valid claims can be are paid and no duplication of payments.
The incorporation of blockchain technology by insurance industry players will ensure that trust can be built among insurers and between insurers and customers. Trust has the potential to increase customer loyalty for firms and attract new clients who will be encouraged by the firms’ successes. Trust can also play a leading role in reinsurance of smaller insurance firms by the larger multinational insurance companies.
Reduce fraudulent claims
Insurance companies can incorporate the bitcoin technology where blockchain technology will ensure that it reduces fraudulent claims. The technology has potential to detect false billings and tampered documents, as data is decentralized and immutable. Adoption of modern technology enables insurers to lower their loss-adjustment expenses and pass on the savings to consumers. The technology ensures that use of other people’s information to make a claim is limited and provides for encryption of data at the financial transaction level. Proper technology is meant to ensure that the amount of identification information available in the block chain is minimized hence a reduction in the risk of identity theft.
Cyber bullying has been on the rise with more people having access to the internet and uploading their data online. Many insurance companies have found themselves on the receiving end, as most of the insured are prone to losses related to cyber-crimes. The companies that give free insurance quotes now have the option of adopting the blockchain technology, which has the capability to limit cyber liability. The common practice of central storage of data has been proved insecure, as it is prone to hacking. Bitcoin technology enables insurance companies to ensure the security of client information is guaranteed.
Bitcoin technology has potential to ensure insurance firms have a common claims-handling platform that would still make it possible for individual insurers to diversity products and services. Adoption of a blockchain technology is necessary for streamlining the insurance industry by ensuring individual firms can improve service delivery to customers making insurance claims. The technology is also likely to play a leading role in reducing fraudulent activities in the sector and creating a tamper-proof process. Societies can benefit from significantly reduced cases of stolen identities, low costs of making claims, free insurance quotes, and fewer cyber-bullying cases by adopting necessary technologies.