How Blockchain and AI Will Impact the Insurance Industry
Industry 4.0 is going to change the way insurance businesses gather, store, and process data. Blockchain and AI will have an impact on the entire business cycle from insurance underwriting to claims processing.
Today, nearly a third of insurance customers globally are using solutions from insurtech providers, according to Capgemini Consulting. Over the past years, technologies have significantly changed the traditional insurance industry and will continue to do so. Particularly, Artificial Intelligence and blockchain technology will play an increasingly important role for both insurance companies and their customers.
READ: AI and Blockchain: The Future of the Healthcare Industry?
Claims processing: Blockchain-based data sharing and AI-supported data verification
Processing insurance claims is a slow and tedious process that is prone to error and relies heavily on data as well as the cooperation of multiple parties. In case of an accident, for example, the patient, his health insurance, healthcare providers, and potentially even law enforcement authorities need to exchange data. This communication can be inefficient and time-consuming.
Using blockchain technology, all involved parties can upload, view, and manage documents directly and digitally. Insurance providers can even automate claims processing using smart contracts.
The New York-based technology firm Lemonade combines blockchain’s smart contracts and AI technologies to immediately verify an insurance claim so a customer can get paid quickly. Paris-based Fizzy, a flight delay insurance tool that belongs to AXA, uses blockchain to ensure that members whose flights are delayed more than two hours are immediately compensated.
Asset tracking: Proof of ownership
Blockchain is already being used by many companies to efficiently track the proof of ownership of certain assets. Being able to prove ownership of an asset is paramount for many insurance policies, for example, liability insurances.
California-based Beenest, for example, offers homeowner insurance for property damage. The company is teaming up with WeTrust to develop blockchain-based insurance policies. Likewise, Zurich-based B3i has developed a blockchain prototype for property reinsurance contracts.
Fraud prevention: AI-based image recognition and blockchain-based data-sharing
Statistics suggest that insurance frauds steal close to $80 billion per year. The introduction of blockchain in insurance companies will improve collaboration among several insurance providers, making it easier to detect and prevent fraud attempts.
London-based Dynamis focuses on unemployment insurance. Policy applicants need to provide their LinkedIn profile to verify their current employment status. For those who are unemployed, the company’s blockchain will check the genuity of the claim through profile connections and issue insurance payments.
BlockClaim developed a hybrid artificial intelligence and blockchain solution. Their feature provides insurers with AI-powered fraud filtering and blockchain claim automation. An image recognition AI module automatically detects damage to vehicles in the event of an accident claim and validate whether it’s genuine or fraudulent.
Industry 4.0 will reshape the insurance industry
Blockchain provides a tool that enables secure, transparent, and cost-effective data-recording and data-sharing. AI can complement the insurtech suite by personalizing insurance policies, automating the underwriting process, and chatbots can realize a more customer-centric marketing approach.
Data is the centerpiece of the insurance industry. Many insurance companies have started investing heavily in both blockchain and AI and are already seeing results. As soon as the first pilots have been successfully implemented, it is only a matter of time until insurance companies start using blockchain and AI technologies on a large scale.
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