Most people have heard of ‘Bitcoin’ and ‘cryptocurrencies’ nowadays.
Bitcoin and other cryptocurrencies are often in the news due to their unique impact on society.
Blockchain, the technology that underpins cryptocurrencies, has far-reaching applications across a wide range of industries including the car insurance industry.
Why consider taking a chance on emerging technologies like blockchain?
Perhaps the added efficiency from its use can help insurers provide more affordable car insurance by further modernising their internal systems.
What is blockchain?
In simple terms, a blockchain is a type of decentralised online database that contains a growing list of digital records called blocks, that are linked together and shared across a network of computers.
Each block includes a type of mathematical algorithm, a kind of software code.
This algorithm automatically maps the data of the previous block, adds a timestamp, and other transactional data.
How can this be applied to car insurance companies?
Blockchain technology could streamline internal data processing, reduce paperwork and potentially improve client care.
Blockchain can allow for ‘fully-online” client policies which are known as smart contracts.
These smart insurance policies can be coded to automatically trigger instructions within each contract if specific requirements are met.
This type of automated technology could accelerate processing claims and reduce admin.
For example, a smart car insurance policy could automatically capture the client’s details and accident reports.
The client’s car could be fitted with a device that then triggers an insurance claim soon after an accident has occurred.
Blockchain usage has potential challenges that need to be considered.
Existing internal systems are familiar, and their underpinning technology is more mature, which has its benefits.
It could be highly expensive to switch to a blockchain-powered business backend because the skills required to develop it and maintain it are relatively scarce.
Additional training would be required to onboard existing staff to make use of it. There could be security concerns.
Hacking and related data theft is even more of a potential threat with everything being online.
There is a growing case of smart contracts, which are being embraced mostly overseas at the moment.
As always, the client’s needs should be prioritised. Insurers will continue to find ways to add more value to their products.
The importance of customer-centric business practices is integral in such a competitive industry and especially with motorist’s wallets being squeezed more and more with rising daily expenses.
This article was published in partnership with Prime Meridian Direct.