Blockchain Market in the Insurance Industry is expected to register a healthy CAGR of over 57% during the forecast period (2020 - 2025). The number of blockchain applications in insurance is growing every day, and somehow every major player across the sector will be using them in the near future. This will create massive opportunities for the fintech sector, as well as for insurance companies that are willing to embrace the change.
- Companies are incurring huge loses because of false claims and scams that happen every day in the industry. To overcome issues like this, insurance companies are using technologies like blockchain in their existing workflow. For instance, according to the SAP Digital Transformation Executive Study, banking and insurance executives plan to more than double their investments in blockchain by 2019.
- The insurance industry is beginning to understand the importance that blockchain technology has evolved and will leverage over the insurance sector due to its security and immutability features.
- Blockchain offers to be the central repository of truth, using which, underwriters can source data from external sources to automate some aspects of underwriting since the data in the blockchain is trustable and is from a verified source.
Scope of the Report
Within insurance, the claims and finance functions are high-value areas where blockchain could be beneficial, especially when you look at processes that need ongoing reconciliation with external parties. Insurers and customers waste a lot of time verifying their documents and identity. This can be reduced with a blockchain platform that can talk to other blockchain platforms to verify the identity of the user. Various standalone services among the insurance sector such as smart contract, identity management & fraud detection, death and claims management, governance, risk and compliance management are considered under the scope of the market.
Key Market Trends
Smart Contract is Expected to Hold a Significant Market Share
- Smart contracts powered by a blockchain could provide customers and insurers with the means to manage claims in a transparent, responsive and irrefutable manner where claims-handling could become more efficient and streamlined, resulting for improved customer experience.
- Contracts and claims could be recorded onto a blockchain and validated by the network, ensuring only valid claims are paid. Smart contracts would also enforce the claims for instance, triggering payments automatically only when certain conditions are met. For instances, smart contracts can be coded to accept feeds from the telematics devices, and in the event of an accident, automatically raise insurance claims & trigger pay-outs. They can also recommend trusted service stations in the vicinity and call for medical assistance should that be deemed necessary.
- Smart contracts possess capabilities to automate several processes that otherwise require manual intervention. In addition to this, the immutability of data increases reliability and helps make faster and correct decisions.
Asia-Pacific is Expected to be the Fastest Growing Region
- The emerging economies of the Asia-Pacific region represent an unprecedented opportunity to experiment with low-cost innovation and open regulatory frameworks of blockchain technology across the insurance sector.
- As the insurers are expected to increasingly leverage on the growing application of IoT for data gathering across the emerging economies, the blockchain-based implementation could increase the efficiency of the overall process to a great extent and will enable insurers to capture sensory information in a secure and tamper-proof method. For instance, ICICI Lombard is using AI in healthcare insurance related claims to identify any fraud. NAy transaction validated and stamped are hard to change and can be verified using AI for real-time settlement.
- For instance, China, despite the harsh regulations imposed on certain activities related to cryptography, is now advancing on its part with a vision of incorporating blockchain technology in its state plans, and even including it in its thirteenth five-year plan, which consists of a road map of governmental developments from 2016 to 2020.
The blockchain market in the insurance industry is highly concentrated and consolidated with a few major players. In terms of market share, some of the major players currently dominate the market. However, with the advancement in the blockchain technologies along with cloud deployment, new players are increasing their market presence thereby expanding their business footprint across the emerging economies.
- March 2019 - ChainThat plans to launch a blockchain risk and capital exchange for the insurance and reinsurance market in Bermuda. The exchange will allow broker, reinsurance and insurance companies access to the capital markets using blockchain.
- November 2018 - The Dutch Judicial Information Service had selected Guardtime’s KSI Blockchain technology for integrity assurance of new e-services. The blockchain integration will ensure transparency, auditability, and security of the information processed in government systems.
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