Blockchain: the new stakeholder in insurance

If the insurance world pays special attention to this promising technology, it is because it is disrupting all insurance practices in a changing legislative framework.

If the insurance world pays special attention to this promising technology, it is because it is disrupting all insurance practices in a changing legislative framework.

First of all with the arrival of the Hamon law which offers subscribers the possibility of terminating their insurance contracts more simply: home, automobile or even loan insurance. This will allow users more freedom and financial gain by comparing insurers while promoting competition between the different French players in the sector.

It is in this competitive context that the Blockchain becomes a real strategic lever to differentiate itself thanks in particular to the creation of new services.

Among these new services there is the emergence of “smart contracts”, the use of these smart contracts is particularly relevant for everything related to so-called parametric insurance by simplifying the transaction process, claims and especially compensation. .

Thus, Axa has already set up the Fizzy service which automatically compensates passengers in the event of a flight delay. In this case, the smart contract then connects to the airport database to have the data inherent to the flight, as soon as the system detects that the transaction is outside the framework defined beforehand, the insurer agrees that the clause is fulfilled. and directly compensate the insured.

In the same spirit, Allianz carried out the first smart contract experiments in the context of natural disasters, by crossing information such as the publication of state decrees recognizing natural disasters (which includes the area and the periods when it is the natural disaster is located) with the location of the policyholder. Therefore, contracts can be executed without the intervention of an expert. It is therefore easy to illustrate the advantages of such a contract for a farmer following a period of increased drought.

Insurtech Cuvva, in the United Kingdom, offers car insurance payable by the hour, which, thanks to blockchain technology, allows a motorist in a few minutes to insure when he is using a car. As part of home insurance, blockchain joins forces with the expansion of connected objects and other sensors in our homes. Here we can easily imagine an automatic reimbursement following a prolonged power failure, a flood causing damage or the failure of a device.

The application of blockchain allows the development of smart contracts which represent a very strong competitive advantage and could become a significant commercial argument.

In the context of life insurance, since January 1, 2016, insurers have to face the new obligations imposed by the Eckert law. In fact, on the death of the insured, this law requires insurers to redistribute the sums kept from dormant life insurance contracts to their beneficiaries.

To do this, the insurer must regularly check the information related to the insured during the life of the contract. Thanks to the blockchain, the control could be carried out in an automated way by crossing the information of the insurer with that of the RNIPP (The National Directory of Identification of Natural Persons), as soon as a death is noted, so that the beneficiaries are directly compensated.

Here is the schematic operation:

Blockchain in the insurance world cannot be approached without more broadly talking about the fight against fraud and money laundering. This is referred to as KYC “Know Your Customer” insurance. The process would consist of giving each client an identity translated by a token on the Blockchain which would then be exchanged from one organization to another.

This would make it possible to identify a “certified identity” of the insured which could then be shared between insurers in order to detect fraud attempts more quickly.

By making it possible to authenticate and secure exchanges and transactions without the intervention of a trusted third party, blockchain could breathe new life into this sector with the emergence of new services and by disrupting uses while providing a response. the regulations in force.

The potential and advantages of blockchain therefore no longer need to be demonstrated, however a few questions remain unanswered today: the cost of this technology, the legislative framework which remains unclear, the use of personal data and the complete overhaul of the business. model. According to a study the

According to a study by the French Insurance Federation and PwC, if “56% of insurers recognize the potential of blockchain, 57% do not yet know how to exploit it”. There is therefore still some way to go before the full advent of this technology in the insurance sector.

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