Page 31 - Insurance Times September 2023

It's important to note that while blockchain offers numerous various sources, such as weather stations or IoT devices.
benefits, it also has limitations such as scalability concerns, When predefined triggers are met (e.g., a specific
energy consumption in certain consensus mechanisms, and weather condition), the smart contract automatically
regulatory challenges. Therefore, careful consideration of executes the payout. This can expedite claim
the specific use case and implementation is necessary to settlements and improve coverage for events that are
harness the full potential of blockchain technology. difficult to assess through traditional methods.
5. Streamlined Underwriting and Verification: Blockchain
Potential uses cases of Blockchain in the technology can simplify the underwriting process by

Life Insurance Industry enabling secure and efficient verification of policyholder
information. By storing data on a blockchain, insurers
1. Fraud Prevention: Blockchain can help prevent fraud can access verified information without the need for
in life insurance by cre-
repetitive verification from multiple sources. This
ating a secure and
reduces the time and resources required for
transparent system for
underwriting, enabling faster policy issuance.
storing policyholder in-
formation. By recording 6. Policy Transfers and Secondary Market: Blockchain
policy details, claims, can facilitate the transfer and trading of life insurance
and transactions on a policies in a transparent and secure manner.
blockchain, it becomes Policyholders can tokenize their policies on a blockchain,
difficult to manipulate allowing them to be traded as digital assets. This opens
or forge records. This opportunities for the creation of a secondary market,
can reduce instances of fraudulent claims and improve where policyholders can sell their policies to interested
trust among insurers and policyholders. buyers, providing liquidity, and potentially increasing the
value of their policies.
2. Smart Contracts: Blockchain enables the use of smart
contracts, which are These are just a few applications of blockchain technology
self-executing con- in the life insurance sector. Now, we have perspective of the
tracts with predefined block chain use cases, it is imperative to evaluate the
rules and conditions. In benefits of using block chain technology in Life Insurance.
the context of life in-
surance, smart con- Benefits of leveraging Blockchain
tracts can automate
claims processing and Technology in Life Insurance Industry
payouts based on pre- 1. Enhanced Security: Blockchain provides a distributed
determined criteria, immutable ledger that stores data across multiple
such as the occurrence nodes. This makes them very resistant to manipulation
of specific events or milestones. This automation im- and fraud. By employing strong encryption and
proves efficiency, reduces administrative costs, and en- consensus mechanisms, blockchain ensures the security
sures accurate and timely claim settlements. and integrity of policyholder information and reduces
3. Data Privacy and Security: Life insurance involves the the risk of data breaches and unauthorized access.
exchange of sensitive personal and medical information. 2. Improved Transparency: Blockchain provides a
Blockchain technology can enhance data privacy and transparent and verifiable record of transactions,
security by providing a decentralized network where policies and claims. All participants in the network have
data is stored across multiple nodes. This eliminates the access to the same information, creating a common
need for a central authority to hold and manage data, source of truth. This transparency increases trust by
reducing the risk of data breaches and unauthorized allowing insurers, policyholders and other stakeholders
access. to independently verify the accuracy and validity of
transactions and policies.
4. Parametric Insurance: Parametric insurance policies
are based on predefined triggers or indices rather than 3. Streamlined Processes: Blockchain can automate and
traditional claims processes. Blockchain can facilitate streamline various processes in life insurance. Smart
parametric insurance by providing real-time data from contracts are simple programs that are stored on a

The Insurance Times September 2023 27