Blockchain is the pioneer of the current industrial revolution. The rate of blockchain infusion on organizations in healthcare, financial systems, the insurance industry, and other sectors is constantly rising. As we’re talking about the insurance sector, primary insurance plans like automotive and health insurance are heading towards seamless features and customer management. Further, the blockchain infusion rate is set to skyrocket to break its previous growth records, with futuristic technologies associated with blockchain. More or less, the easier blockchain technology adaptation will be, the insurance industry adaptation will increase.
Blockchain can streamline the insurance operations, reducing chaos within the system. Users will get most of the benefits, and the insurance providers and aggregators will end up with enhanced customer engagement, fewer data silos, and cutting down the major problems.
Read through this article to understand how blockchain can solve claim settlement and overclaiming-related complexities in health and automotive insurance. Most of the explanation will be on a use case basis so that the understanding process will be easy.
Blockchain in Making Claim Settlement Better
Blockchain technology provides systems and frameworks, which can be very useful for modern world insurance claim settlements.
Just take the vehicle insurance; the human factors that come with the claim settlement process make the process inefficient. According to experts, the average claim settlement takes more than 7days, which is due to the time taken by appraisers and underwriters to accurately calculate the cost. The data is insufficient to accurately determine the payable for the accident claims settlement ( Repair cost vs part replacement). It is based on the past experience and judgment of the appraiser and underwriter.
Blockchain-enabled Smart Contracts with the IOT, AI ML interface can improve the claim settlement process, by determining the exact cost of the repayment. Although there are few human-centric parts in the insurance claim settlement process, blockchain can’t take away the accident inspection and verification tasks, yet insurance appraisers can hugely imply blockchain record previous insights. Accidents, verification, the inspected necessary reports, and the cost incurred can be recorded in the immutable and distributed blockchain ledger. Later, insurance appraisers can decide future case decisions based on pre-noted insights.
A blockchain-backed claim settlement process starts with regular beneficiary claim submission. In critical cases, family members submit their claim submissions on behalf of the owner of the vehicle. Appraiser reaches the location to take pictures and determine the extent of damage interacting with the service center. This can also be managed efficiently using IoT-enabled blockchain. Automatically, necessary details about a car, its scrap value, depreciating value and current working status, and pollution reports are automatically tracked by blockchain and IoT through scanners applied with the number plate. Real time Camera based scanning of vehicles can help underwriters determine the cost accurately, if they have a database of vehicle – parts damage information. A database of part replacement costs, repair costs linked to AI ML based solutions can help in determining the cost quickly.
This can go one step further if the insurance company works with OEM on a partnership model where the sensor and telematics data of the vehicle are shared to determine the costs accurately. The partner service centers can be linked to blockchain for real time data sharing without having to compromise on data security and privacy.
Without IOT, telematics data, still the process can be made efficient using Blockchain governance. After the provider gets the request, insurance appraisers will note all the necessary details about that accident from their blockchain network. Also, the insurance appraiser team will take real-time scenarios like images, real inspections, and accident forensic reports to ensure the estimated damages.
Then, the appraisers will run a Smart Contract and AI ML-based calculation to evaluate the appropriate market-backed costs that’ll justify the intensity of the accident. Smart Contract will connect to affiliated garages and transportation service centers to commence repairing. After repairing, Smart Contract will take the real-time details of the updated car and store that necessary details in the blockchain network.
Of course, there’ll be another technological layer to justify and match the pre-noted insights with real-time situations. AI and ML technology will play a significant role with blockchain technology to make the claim settlement process smarter and simpler. Above all over-claims, duplication of work, data manipulation and fraud can be totally prevented by the use of Blockchain technology.
The health insurance sector is more sensitive than the previous one we’ve talked about. The real-time data collection basis doesn’t work with health insurance; it’s up to doctor checkup basis. Moreover, patients may not feel comfortable sharing all data. The fear of sharing data on blockchain does not arise, as it is the most secure way of sharing data till date. Due to its immutable nature,data manipulation and misuse can be totally prevented.
Electronic Medical Record based blockchain solutions will help in determining future health risk and the insurance type based on patients current health condition and lifestyle. During Emergency situations the coverage agreement will start processing through beneficiary or third-party actors on behalf of the beneficiary claim submission. With the use of real time data from hospitals and IOT medical devices, insurance claims can be processed quickly by accurately determining the costs for the treatment. This can be determined without human interference or judgments.
As insurance claim settlement is fully information-focused, beneficiaries have to submit all their data to get the claim. Whether they allow blockchain to access their data or not, the end process requires full data access consent from the patient.
The insurance appraisers or in-house doctors will check the patient’s health status to approve the claim submitted by a beneficiary. Whether it’s surgery or specified treatment, Smart Contract and human analysts will suggest affiliated hospitals and the exact market rate of medical treatment. Smart Contract can’t take any automated decision here, as sensitive factors like human health are involved.
Next, the insurance provider’s automated payment system will pay the claim amount. And the rest of the process is reconsideration and deduction depending on the beneficiary and their will.
Altogether, blockchain with IoT, AI, and ML can automate, boost, enhance and lastly benefit the claim settlement process through Smart Contract. More or less, these practices in a controlled environment have shown remarkable results; surely, they will do the same in real-world use cases.
Blockchain in Reducing Overclaiming Cases
Blockchain not only could change the gross insurance settlement processes, but it also could be beneficial for emerging overclaiming complexities.
A major reason behind overclaiming factors is the lack of real-time market data. Car insurance providers depend on third-party companies or car repair service providers to determine the actual vehicle repair or restoration cost. But, with a constantly evolving market, it becomes difficult for service providers to estimate the required amount.
Consequently, car insurance companies face overclaiming-related factors. And,
Blockchain technology can automate the repair and restoration cost determination process with an immutable distributed ledger infused with the latest AI and ML technologies. AI and ML technologies can attain market research and real-time cost data. After researching and calculating the cost, the blockchain ledger will record it elaboratively, making it as a reference to future decisions. It helps in bringing in some cost standardization for different vehicle make, and model.
Also, each insurance settlement case can be recorded through a blockchain ledger, which can be applied as a decision improver for future overclaiming issues. After blockchain automation, overclaiming factors will drastically reduce, as nobody can question scientifically calculated costs, keeping the insurance claim settlement process easier, faster, and effortless.
Previously we’ve discussed how blockchain can collect necessary information about a vehicle through established endpoint connections. Thus an information database can help determine whether a car part needs replacement or repair.
Also, IoT-enabled blockchain technology surveillance systems can also analyze the estimated damages, helping insurance appraisers decide on further requirements.
Blockchain use cases are not restricted to solving claims processing in automotive, health and commercial insurance. It can be the backbone of every insurance company, helping companies automate their governance, put checks and balances in place, keeping the profit loss, revenue and bottomline factors into consideration, aiding and guiding underwriters, advisors, auditors, appraisers to make informed decisions.
SoluLab is working with top insurance companies to build enterprise blockchain roadmap and strategy. Contact us to know more.