Interest in blockchain technology, which provides a digital solution for storing and transmitting information in a secure and transparent manner, without any central administration agency, is steadily increasing. While this distributed digital ledger approach is probably best-known for underpinning crypto-currencies such as Bitcoin, the FinTech business is far from being the only industry to find a use for the blockchain. Energy and transport sector players have also come up with applications for the technology and, going forward, we are likely to see widespread use of the blockchain in the insurance business as well. A recent report by revenue tracking consultancy MarketsandMarkets forecasts exponential growth in this area, with blockchain-related revenue in the insurance market predicted to rise from $43 million in 2017 to $1,393.8 million by 2023. The reason for this expected surge is the heightened need for both transparency and security in an industry that is still sometimes rather rudimentary in its approach – with insurance policies drawn up on paper and details often agreed on the telephone, for example – and flawed in its mechanisms, as evidenced by the relatively high proportion of fraudulent claims. Sector association InsuranceEurope estimates that 10% of total declared damage and losses reported by European policyholders are falsified, while insurance companies worldwide lose $80 billion every year due to fraudulent claims, according to figures gathered by industry data specialist ReportLinker. In this situation, blockchain technology has the potential to make a real difference, provided that legislation follows suit – a prerequisite which could certainly benefit the Asia-Pacific region, where players in a number of countries are showing the way.
By Sophia Qadiri