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Indian Insurers initiate blockchain project to diminish expenses

Jan 06, 2018 Posted /  5104 Views

Indian Insurers initiate blockchain project to diminish expenses

The blockchain is a distributed ledger that is fundamentally explained as a technology with an enormous innovation potential in all areas of financial services. Till date, it is majorly in the banking arena where blockchain use cases have been recognized. Nonetheless, the blockchain technology also offers potential use cases for insurers, which include innovating insurance products and services for growth, mounting effectiveness in uncovering fraud and pricing, and diminishing the administrative cost. With these application insurers could address some of the major challenges that they are facing in the market, for instance, limited growth in mature markets and cost reduction pressures.

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Taking this utility of Blockchain in view more than a dozen Indian insurers, including HDFC Life, India First Life and Canara HSBC OBC, combined together and jointly initiated the country's first blockchain project in the financial services industry to relieve and restraint the costs for companies running medical tests and evaluations, and to promote more confidentiality and protection of the data collected from the people.

These insurance companies have tied up with IBM and Cateina Technologies to develop a blockchain-based solution and the design is based on distributed ledger technology, which assists participants to operate on common areas of interest. It is estimated that this project will help in enhancing their business by providing customer KYC, claims history, medical records, and agent track records while reducing fraudulent transactions.

Subrat Mohanty, a senior executive vice-president, head-strategy, HDFC Life said that Blockchain technology has the potential to change the way financial services transactions were carried out till now. It is considered as a significant move because life insurers spend a lot of time and were struggling to discover and authenticate records manifold for the same customer. At present, every insurance company in India first conducts medical tests for potential customers and a panel of doctors ascertains their health condition and analyzes their insurance eligibility.

Blockchain would reduce these inefficiencies and provide a record of information that can be accessed in a secure manner. According to various Blockchain based the insurance industry can leverage blockchain technology in an important way to transform their processes across the insurance value chain, such as claim fraud detection and claim settlement said most of them are saying that Blockchain technology will also facilitate and enhance customer experience and positively effect distribution performance.

It is anticipated that Blockchain will have a straightforward impact on diminishing the operational costs and improving efficiencies. Although the technology is still in its blossoming stages of commercial exploitation, insurers state there is a necessity to construct policies and procedures to make certain that personally identifiable information and health information are always secured.

The blockchain is a digitization technology, which could facilitate in implementing the strategic interest of the insurers. The biggest challenges to its industry-wide implementation are assistance in collaboration between market participants and technology leaders, ensuing in the operational transformation, and developing a stimulating regulatory environment. Laying the foundation to address these challenges at present will put insurance companies in a position to have at-scale blockchain use cases and profit from the technology’s benefits in upcoming years.

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