Chainlink Shares How Blockchain Technology Can Revolutionize Insurance Sector
Blockchain can make a prominent transformation in the insurance industry. Decentralized oracle service Chainlink bestowed how blockchain can change the way insurance is managed today. Based on its research study, the combination of smart contracts, distributed ledgers, and decentralized oracles provides an upgrade to the conventional insurance that profits the insurance companies and policyholders.
The new form of digital insurance products will present new risk transfer products to recently uninsured populations and unfasten the participation of less sophisticated users in the mass adoption of crypto natural products and services.
The study prophesied that autonomous and semi-autonomous insurance would be available by 2022. By 2025, there will be at least five decentralized independent organizations (DAO)-style insurance cooperatives and non-custodial risk pools. By 3030, there will be re-platforming of surviving insurance products with digital agreements in use.
Traditional insurance will be updated and will utilize digital-first insurance contracts that allow unique privacy, verification, and transparency. It will also substitute the centrally automated digital insurance contracts, which excludes single points of failures and decreases direct and indirect compliance and regulation costs. This will also occur in lower insurance premiums, which make it more affordable for those who have no insurance plans yet.
Insurance companies continuously encounter deceitful claims. The insurance industry employs a considerable amount to combat fraud. That’s why policy premiums are often costly as it has to cover what’s consumed for administrative cost, underwriting procedures claims processing, and dispute resolution.
Blockchain’s smart contracts can connect the trust gap between insurance companies and policyholders.
“Smart contracts are digital contracts that run on decentralized infrastructure with automated execution based on if/then parameters, such as ‘If x happens, execute y.’ They replace the claims processing portion of traditional insurance agreements with high-trust, transparent, and tamperproof data-driven policy arbitration that neither side can exploit or manipulate,” the article read.
It also provides confidentiality and connectivity. Smart contracts can be utilized to produce revolutionary new insurance products such as peer-to-peer insurance, micro-insurance, and decentralized autonomous insurance pools, and more.
Meantime, blockchain can also support the transportation industry. It can help support supply chain tracking, automobile’s history, increase automation, and improve ride-sharing. It can also drive more opportunities and reduce the individual costs for mobility.