Insurance in the Era of Blockchain
Authored by: Ashish Nangla, Sr. Director – Technology, Synechron
According to the Coalition Against Insurance Fraud, insurance claims fraud has reached an estimated $80 billion dollars a year.
New technologies like blockchain are beginning to change the insurance industry and are spanning across high-value asset areas like diamond and fine art theft all the way to the most common of every devices – mobile phones.
In 2015, a start-up called Ascribe raised $2 million and launched a new platform for claim attribution around art, creating a digital fingerprint or blockchain-based authentication around art. Similarly, Everledger markets itself as a permanent, immutable ledger for diamond certification and related transaction history, providing verification information to insurers, owners and law enforcement alike around this high-value asset and other high-end luxury goods. Rather than rely on a material, serial number, the technology creates a digital fingerprint for the object, stored on the blockchain that can then be digitally verified when validating insurance claims. These start-ups are demonstrating the transformative potential of blockchain for insurance.
Global insurance organizations have also recognized the potential for blockchain to reshape the insurance industry. In May of 2016, blockchain was adopted for a claims record system for re-insurance in London and analysts such as Matthew Wong of CB Insights are predicting other applications such as next-generation mutual insurance, where people pool their policies.
With the insurance blockchain an evolving reality, insurers should ask themselves:
What’s your insurance criteria?
An important first step is to establish an insurance criteria for lost or stolen property, such as mobile phones, that can be coded into smart contracts in order to authenticate the claim. Blockhain-enabled payments could then be automatically occur when the criteria is met. Blockchain-authentication applications should consider these important data sources as part of that process: police report, verification insurance is current, phone owner identity check, phone status check (e.g Has it been jailbroken or tampered with), phone usage and payment method.