107,000 fraudulent insurance claims worth £1.2 billion uncovered by insurers in 2019.
With the amount of money lost to insurance fraud, blockchain could play an imperative role to minimising theft, fradulent claims and dishonest insurance applications, which would benefit both the industry and customers whom would pay lower premiums.
One of the most common forms of insurance fraud comes through people getting insurance quotes thorugh comparison websites, and altering key data in order to get the cheapest price possible.
A key feature of blockchain is that it is immutable – that is, the data structure in a blockchain is append-only. So, the data cannot be altered or deleted. Hence, this would mean that insurance applications can be processed based on already verified data held on the blockchain, allowing insurers to be confident that data held on a policy is genuine, reducing processing time.
An example process flow:
- Upon payment, the record of the insurance is stored on the blockchain and no changes can be made by the insurer after.
- Accident happens – affected parties go to hospital and have their injuries assessed, confirmed and signed off by a doctor. Medical records then updated on blockchain.
- Insurer automatically confirms on blockchain that hospital stay occured, and the cost of the damages.
- Payout is processed automatically and made to affected parties.
Blockchain can rapidly speed up insurance claims and reduce the amount of human resources required to process a claim.
Why can blockchain benefit insurance companies?
A fradulent insurance claim is detected