Technology is advancing in huge strides, but if there is one development that has particularly been talked about in the last few years, it’s blockchain. Perhaps due to its novelty, the mystery surrounding its creator Satoshi Nakamoto (whose real identity is unknown), or because of the large number of different uses that it promises.
One of the sectors where experts predict that it will have a big impact is insurance. And blockchain presents some inherent characteristics that could be very useful in insurance: it is transparent, immutable, traceable and secure (very secure).
“Thanks to blockchain we can trust the data that we handle, both our own and external, which is very useful for insurers and their customers,” indicates the head of cybersecurity at Tecnalia and co-author of the book Blockchain: the Internet’s industrial revolution, Óscar Lage.
One of its potential applications will be in the design of customized products and services that depend on specific parameters: so-called parametric insurance. “These insurance policies do not require the evaluation of an assessor, and their clauses make it clear what the conditions for compensation are. For example, if a flight arrives a certain number of hours late or if it has rained more than a certain number of litres per square metre,” explains Lage.
With blockchain, “people would not have to make claims and the payment would be made immediately if specified conditions are met,” details Lage. The digital technology that is behind it would be a smart contract, which are native to blockchain. They don’t have to wait for the subsequent approval of the parties, but are executed automatically. “This gives confidence, agility and saves management costs,” he adds.
Another sphere where blockchain can be applied is in health insurance. Often, we have a lot of medical records that are all over the place, and doctors do not have all the information centralized to make the best diagnosis. But there are initiatives, for example in Estonia and Dubai, where they are trying to group all the information together thanks to this technology.
“There may be two evolutions: firstly, that the different entities reach a consensus and the customer has a medical history, and in addition that the user themselves will be the one to protect these data and decide with whom to share them”, explains the expert. Taking into account that this type of information is very sensitive, this achieves extra privacy for the user, “especially if it is a public person”, he adds.
If we provided this information to our insurance company, they might, for example, give discounts on health insurance to people who do not smoke, do not drink and lead a healthy lifestyle.
Essentially, any record of documents in the blockchain, be they contracts, claims, medical records or policies, allows for faster handling and reduces the likelihood of fraud.
We are left wondering, when will this technology be visibly incorporated into the insurance sector? Lage predicts that it will happen soon: “Parametric insurance policies are already out there and applications for medical records are being tested. We are in a pilot phase, but in two years we will begin to see that they will endure and be scalable”.