Blockchain technology is essentially a peer-to-peer that allows users to centralize private information and logs transactions in a completely secure environment. Blockchain technology is perhaps best known for its use with bitcoin, but can be used for things other digital currency. Like insurance, for example.
Perhaps the best example of how blockchain could be used to revolutionize the insurance industry lies with car insurance. Blockchain technology could allow insurers to access a potential clients information in a secure environment. That means insurers could know a potential policyholders financial information, health information and detailed credit card info. What that all means is that insurers will be able to tailor their policies directly towards individuals. The end result is a better policy, for a better price.
Dale Sherman, vice president of claims at Allstate Insurance Co. in Northbrook, Illinois, spoke with Business Insider about blockchain technology and insurance. According to Mr. Sherman “…blockchain has the potential to revolutionize underwriting…Coverage could be just-in-time or on-demand. You can imagine mile-by-mile insurance for a specific individual based on their very specific, idiosyncratic risk profile that would change in value, and there could be a bidding marketplace. Blockchain could enable that in real time depending on where they are going.”.
Of course the potential blockchain technology has in the insurance world goes beyond just auto-insurance policies. The tech could also work wonders dealing with catastrophic losses. One proof of loss could then serve as proof for an entire catastrophe situation if blockchain was utilized correctly. The potential is near limitless.
It is important to note that while there is a lot of potential in the merging of blockchain technology and insurance, there are a lot of problem to address as well. Namely, the general lack of regulations surround blockchain tech. Blockchain is so new that there really is not a helpful set of government regulations surrounding it yet. For a space like insurance that is predicated on regulations, this can be a bit of a problem.
The integration of blockchain technology and insurance is likely a bit further away than many hope, but the integration is coming. As to when, we’ll just have to wait and find out. This is certainly a space that is worth keeping an eye on.