How blockchain is disrupting the insurance industry

Most insurers have started exploring the opportunities the blockchain can deliver to their business. With 81% of insurers globally familiar with the technology, some areas of focus are fraud prevention, the digital tracking of medical records, and developing smart contracts. JC Oberholzer, Chief Systems Architect of SilverBridge Holdings, examines the role this technology will play in making for a more secure and efficient way of doing business.

The numbers speak for themselves. More than 24 countries are investing in blockchain with in excess of 90 companies joining blockchain consortia. And venture capital-backed Bitcoin and blockchain fintech investment activity has grown from $3 million in 2011 to almost $500 million in recent years. Even so, when talking about the blockchain, many people default to its part in the cryptocurrency market. However, the technology has the potential to disrupt any industry sector, leaving in its wake a more effective system way people get to own the value they create.

Currently, insurers struggle with the inefficient exchange of information, complex liability assessments when it comes to reinsurance, fragmented data sources, the use of a middleman, and a manual-driven claims review and process environment.

“The blockchain can change all that. Even when only used in the underwriting process, the blockchain can help reduce costs, improve risk assessments, and enhance client onboarding. It can also change the claims submission process from its registration through to assessment and payment. Having a simplified (and secure) environment to automate much of this, will radically reduce fraud and deliver a better customer experience,” notes Oberholzer.

Think of the blockchain as a more sophisticated way of recording information in a database. Once added to the database (the blockchain), the data cannot be removed or altered in any way. This essentially creates a verifiable, permanent record. Cryptocurrencies were of course the logical result of this new technology, but even so the influence of the blockchain extends so much further.

Modern times

Two of the traditional challenges of the insurance industry – fraud and customer service – can be transformed with the blockchain. Because blockchain ensures records are not altered in any way and can be verified with complete accuracy, it provides significant opportunities for insurers to embrace the technology.

“Because data stored in the blockchain cannot be altered, it all but eliminates the potential for insurance fraud. No single element of the data can be modified in any way. And let us not forget the transactional capacity the technology unlocks. Suddenly, smart contracts become a reality where clients can digitally sign contracts directly with the insurer and claim pay outs can happen virtually instantaneously thanks to cutting out the middle-man.”

In Europe, the B3I Services AG was formed to streamline the development, testing, and commercialisation of blockchain solutions in insurance. One of its use cases highlighted how the blockchain can be used for fraud detection and prevention. This sees how the development of a blockchain network can provide a way for insurers to safely and securely share data to gain visibility into criminal patterns and prevent future financial losses.

From a consumer level, the blockchain can help insurers understand and price risks better. By allowing customer, risk, and policy information to be shared quickly and securely across multiple stakeholders in the insurance ecosystem, the revenue potential and growth prospects will improve by enabling insurers to price their products more accurately.

“Irrespective the use case, the blockchain provides insurers with an opportunity to grow in new, more innovative ways. However, they must act sooner rather than later if they are to keep up with the pace of change that has seen the growth of insurtechs in the market. Fortunately, the blockchain can scale effectively according to needs, so insurers can limit its roll out to best suit their business cases. With the blockchain, insurers not only get an immutable audit trail, but can do so faster, more securely, and efficiently than ever. And that is something that is critical for the connected customer today,” he concludes.

About SilverBridge

SilverBridge has over 24 years’ experience as a leading provider of insurance software solutions in the African financial services industry. Our footprint extends to 14 African countries. SilverBridge’s digital insurance suite allows financial services companies the opportunity to respond quickly to changing markets. With customers throughout Africa, SilverBridge has the knowledge, experience, and technology capabilities to help its clients do better business.

 

IoT and the role it plays in insurance

By the end of this year, forecasts anticipated that there will be more than 14 billion Internet of Things (IoT) devices in use with that number expected to reach 25 billion by 2021. Furthermore, the global market for IoT is projected to grow significantly between 2018 and 2026 with the banking and financial services industry holding the bulk of the market share. Nelson Camara, go to market executive at SilverBridge Holdings, discusses how this growth can benefit insurers.

Thanks to its effectiveness in collecting data at scale to deliver greater insights, some insurers are already embracing IoT to better predict and evaluate risk, expedite claims processing, improve sales, and gain a more comprehensive view of their customers. Of course, the temptation to rush in and push IoT as quickly as possible is there but insurers should carefully examine what their strategic goals are and how data can be used to help achieve this.

“As is the case with any new technology concept, a business case must be developed first, tested, and piloted before embarking on a new digital strategy. Even though the pressure to transform is significant when looking at the growth of insurtechs, incumbents must maintain their focus and investigate an area where they can extract the maximum benefit from IoT.”

Embracing change

Insurers have been tasked with embracing disruption in recent years especially when it comes to customer and partner relationships. IoT can be considered a vital ally in this regard as everything from wearables to sensors in homes and telemetry devices in vehicles can gather vital data especially as it relates to risk assessment.

“This is essential to delivering customer value. Already, some insurers are using telemetry data to identify driving behaviour and gamify the experience (drivers can rate themselves against others nationwide). In turn, it transforms the relationship with the customer. By optimising premiums on an individual level, the insurer not only delivers a better experience for users but strengthens a relationship that may become very fickle when it comes to loyalty.”

These IoT-connected devices have helped some insurance companies significantly lower their premiums. According to an international report, most insurers believe that connected devices and more data will prevent greater losses, which could decrease the number of claims and lower insurance prices for customers who have reduced risks.

Of course, in a world driven by data, care must be taken to remain cognisant of the governance requirements especially as it relates to personal information. Therefore, an effective data management strategy is important that keeps historical data available while tapping into the influx of new data points through IoT-enabled devices.

IoT is providing insurers with a significant amount of data that can be used to asses risk and tailor pricing in more innovative ways. And by developing new personalised risk protection services, they will improve the customer experience as well as the value to be delivered.”

About SilverBridge

SilverBridge has over 24 years’ experience as a leading provider of insurance software solutions in the African financial services industry. Our experience includes working with over 60 customers across 16 African countries.. SilverBridge’s digital insurance suite allows financial services companies the opportunity to respond quickly to changing markets. With customers throughout Africa, SilverBridge has the knowledge, experience, and technology capabilities to help its clients do better business.

Exergy helps insurers overcome the complexities surrounding Debicheck

First launched in 2017, the Debicheck authenticated collections process has been designed to combat debit order abuse – from companies that are processing invalid debit orders to consumers avoiding paying them by unfairly disputing these with their banks. Yet, it has been cumbersome and expensive to implement from an insurer perspective. This has resulted in a slow uptake and market cynicism that this is an effective system.

From a practical perspective, debit order mandates are electronically confirmed by end users with their banks on a once-off basis to ensure no amounts are deducted from their accounts without their approval.

“The lack of widespread adoption shows that the resources and systems required to effectively implement Debicheck are not seen as worthwhile. However, SilverBridge has made significant enhancements to Exergy that help make this a smoother process. Our clients can rest assured that the administrative aspects of Debicheck are taken care of, leaving them to focus on business processes such as training staff,” says Annalie Terblanché, product manager at SilverBridge.

Exergy automates the Debicheck mandate process for insurers who have already implemented it.

“Some of the work we have done for a Johannesburg-based client reflects our commitment to assisting companies on the difficult journey when it comes to Debicheck. Exergy will always remain relevant as we ensure it adapts to ongoing changes in compliance demands. Even though Debicheck only signifies a small proportion of deductions, having this support is essential for long-term growth,” concludes Terblanché.

About SilverBridge

SilverBridge has over 24 years’ of experience as a leading provider of insurance software solutions in the African financial services industry. Our footprint extends to 14 African countries. SilverBridge’s digital insurance suite allows financial services companies the opportunity to respond quickly to changing markets. With customers throughout Africa, SilverBridge has the knowledge, experience, and technology capabilities to help its clients do better business.