Application of
Blockchain Technology
in Insurance
Leveraging Blockchain to Transform
Insurance Industry
Who are we?
We are team of experts bridging artificial
intelligence, Blockchain & cyber security
with proven use cases across ecosystems.
www.snappertech.com
Content:
1. Introduction
2. Challenges
3. Solutions
4. Benefits
5. About us
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Introduction
A World Economic Forum
survey
published
in
September 2015 revealed
58% of respondents
believed that by 2025, the
technological
tipping
point would be reached
for
bitcoin
and
blockchain, with 10% of
global gross domestic
product (GDP) stored on
blockchain technology.
The total market size of
the insurance in India is
projected to be US$ 350400 billion by 2020.
Insurers are evaluating
how
blockchain
technology's ability to
ensure
process
transparency and trust
can be leveraged to
enhance the insurance
value proposition. An
optimistically
cautious
approach, coupled with
an objective assessment
of blockchain technology
in the context of market
dynamics, with small but
relevant
proofs
of
concept (POCs), will help
insurers evaluate and
leverage blockchain to
their benefit.
Promise of blockchain
The solution to all the problems surrounding the insurance
industry lies in one word — Blockchain. Blockchain is
essentially a permanent and immutable record of
transactions within a network. At the root of the blockchain
are ‘digital ledgers’ that are distributed amongst all network
participants to serve as a common source of truth. When a
transaction is conducted, it is recorded in sequence in the
digital ledger and these ‘blocks’ are then tied together into
a blockchain. Since the system relies on references to other
blocks that are cryptographically secure within the digital
ledger, it is almost impossible to falsify. Most observers
therefore believe the system to be immensely more
trustworthy and transparent than traditional approaches to
sharing data across a value chain or even within an
enterprise.
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“FIRST YOU APPLY NEW
TECHNOLOGY TO EXISTING
PROCESSES. ONLY THEN DO
YOU SEE HOW TO USE IT IN
A DISRUPTIVE WAY.”
HEAD OF IT, INSURER
Challenges
Over $45 bn lost globally in insurance fraud.
An estimated 5 to 10 percent of all claims are
fraudulent. According to the FBI, this costs US nonhealth insurers more than USD 40 billion per year.
65% of all fraudulent claims go undetected.
10-15% of claims paid out are later detected as
fraud. ABI estimates that insurers invest
approximately £200 ml each year to identify fraud.
Managing risk and regulatory complexity.
Insurers sit three or four times removed from the
end client or service provider, there are equally high
degrees of inefficiencies, gaps and errors caused by
poor data quality in the front and back offices.
The latest industry report from Swiss Re, a leading
wholesale provider of reinsurance and insurance,
states that direct premiums written in 2015 totalled
$4.5 trillion, before reinsurance transactions.
£24 billion paid out by UK banks in payment protection
insurance (PPI) claims since 2009.
In FY12, the life insurance industry witnessed a
decline in the first year premium collected which
dropped from INR 1,258 billion in FY11 to INR 1,142
billion, a drop of approximately 10%.
The non-life insurance industry has been growing in
excess of 20% over the last two years however the
penetration was as low as 0.7% of the GDP in FY10.
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Challenges for regulatory bodies and key considerations
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This is an opportunity to
develop new blockchainbased products which, by
virtue of their
transparency and greater
efficiency, will be able to
reflect new risks and
markets.”
- Munich Re
Solutions
1. FRAUD DETECTION AND RISK PREVENTION
Blockchain has the potential to eliminate errors and
detect fraudulent activity. A decentralized digital
repository can independently verify the authenticity
of customers, policies and transactions (such as
claims) by providing a complete historical record. As
such, insurers would be able to identify duplicate
transactions or those involving suspicious parties.
Goldman Sachs estimated that in banking,
consistent use of blockchain in KYC/AML could save
$2.5 billion of the estimated $10 billion global
processing costs.
2. CLAIMS PREVENTION AND MANAGEMENT
Within claims prevention, new data streams can
enhance the risk selection process by combining
location, external risk and analytics. A distributed
ledger can enable the insurer and various third
parties to easily and instantly access and update
relevant information (e.g., claim forms, evidence,
police reports and third-party review reports).
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“Blockchain technology is
still a new and uncertain
area for reinsurers but
those who are able to
quickly build, assess and
refine their applications
will
differentiate
themselves. At a time
when companies are
searching
for
cost
savings, the potential of
blockchain to vastly
improve efficiency and
accuracy
cannot
be
ignored.”
3. NEW DISTRIBUTION AND PAYMENT MODELS
At minimum, global insurers can use blockchain to
cut asset management costs by reducing the
hedging fees they pay to protect themselves from
currency fluctuations in international transactions.
$149 billion Additional leveraged loan volume
growth with a reduction in settlement times.
- O’Hearn
4. PEER-TO-PEER INSURANCE
Blockchain adoption has the power to transition
new and existing models of insurance, including
P2P insurance, parametric insurance and micro
insurance, into a new digital age. Blockchain is
powerful because of its secure platform connecting
capabilities.
5. INCREASED BACK-END EFFICIENCY
Data duplication and processing delays cease to
exist, transaction costs are significantly reduced, no
redundant or noncritical data are stored and there is
increased security since every participant in the
consortium network owns a full copy of the ledger.
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6. MAKING INTERMEDIARIES OBSOLETE FOR SOME
COVERAGES
A decentralized consortium network of insurance
carriers that manages all of its transactions online
could eliminate the need for intermediaries for less
complex coverages such as auto insurance and
mass-market products.
7. SMART CONTRACT
Smart contracts contain self-executing protocols
that work with a blockchain to enforce the
performance of a contract across all counterparties.
Claims data is shared across all counterparties.
Identities and contract provisions are immediately
verified. Payments are automatically made. And, as
a result, less adjudication and negotiation is
required and costs are minimized.
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Claim Settlement Process
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Insurance Bots
83%
of
technology
professionals
believe
there will be a cognitive
tipping point in next 5
years.
RPA market is projected
to become $5 billion
market globally.
A proof of concept RBA
project can take as little as
2 weeks with a pilot up
and running within 4 to 8
weeks.
how does Robotic Process Automation Impact Insurance?
In the insurance industry, these automation capabilities
enable more focus and time spent on the customer, and can
mean better experiences not only for customers but for
employees and agents as well. Specific examples of
processes that are being automated through RPA are first
notice of loss, fraud checking and policy renewal, including
data gathering and recalculating policy premiums.
Key benefits:
Reduced error rate from human processing
Cost Savings
Increased Productivity and Efficiency
Scalability and Flexibility
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Benefit
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Our associate & partner:
We are currently associated with APEITA in implementing
block chain in KYC, ASSET TRACKING AND LAND
REGISTRATION.
Achievements:
Learn more about us at:
www.snappertech.com
 We have created over 30 POC’s across cyber security,
artificial intelligence and insurance chain.
 We have a dedicated core and
development team size of 50 members.
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