The Promises of Blockchain to Improve Insurance Industry

If you have a car accident, the first financial company you are going to call is your car insurance claims department. When you get a physical ailment—the first thing that goes through your mind will likely be is your health insurance up to date. Let’s face it—insurance touches nearly every part of our lives. Insurance is an instrument designed to protect our finances.

According to Insurance Information Institute, US citizens paid a total of $1.2 trillion in 2017, for life, health, property, and casualty insurance as reported by S&P Global Market Intelligence.

Lyle Adriano, Insurance Business, identified five areas of concern for the industry.  For starters, the insurance market has been soft for many years. In 2006, annual agency growth was at 12.5%, but dropped to 1% by 2010.  However, it has rebounded up to 5% by 2018, still off by 7.5% from 2006. Adding to the concerns, are state and federal insurance rules and regulations are getting tougher, making the operation of insurance agents more difficult.

Moreover, customers are looking for hassle-free insurance shopping, and the availability of self-service. A trend that will likely continue as millennial’s who were born into a digital age replace the older baby boomers who are now the primary insurance policy owners. (Adriano, Lyle)

Other areas of concern for insurers, is fraud. Sam Mire, Disruptor Daily, advises the reader that insurers continues to be burdened by fraud. “One conservative estimate pegs the losses in the industry from fraud at $80 billion per year,” says Mire.  Mire adds that auto insurance represents the most significant form of insurance fraud.

In this article I look at how blockchain can be used to combat fraud, and in the process lower costs, thereby making coverage more attractive to the younger millennial, and how blockchain can improve efficiencies of data access and protection.

Insurance Industry Adopting Blockchain

The insurance industry is looking at and adopting blockchain to help reduce the costs of insurance and to meet the needs of younger insureds, or policyholders. There are many types of insurance one can get: from health, life, property and to property and casualty insurance—which cover cars, homes and businesses to name a few.

With a trillion dollar industry, it’s no wonder that fraud is the most significant concern among insurance companies. And with the complexity of the industry there are many ways that bad actors can exploit the system. The FBI estimates that the total cost of insurance fraud, excluding health insurance, to be over $40 billion per year. (CB Insights)

The article goes on to say that an area easily exploited is where claims are “shuffled from insurees to insurers and reinsurers in a slow, paperwork-driven process that has many moving parts,” creating an area that criminals exploit to make multiple claims with different insurers involved in a single claim. With blockchain—insurers can close the gaps, and improve the coordination between various insurers that are involved in the claim. This will ensure that all the claims that get paid, are legitimate.

With the distributed ledger inherent in blockchain, the insurer is able to create permanent transaction records that are traceable and with more secured access to protect the data. Moreover, storing claims on a shared ledger can assist insurers and investigators quickly identify suspicious activity across the claims processing ecosystem.

Here are three significant areas that blockchain can work with insurers to help combat fraud. Blockchain can:

    • Eliminate the ability to process multiple claims from the same accident
    • Establish ownership with digital certificates to reduce counterfeiting
    • Reduce premium diversion, to prevent unlicensed brokers from selling insurance and pocketing premiums
      Source: CB Insights, IBM

When fraud is eliminated or significantly reduced, everyone benefits. Savings can directly translate to higher margins for insurers, who can then pass the savings to consumers in lower premiums.

Property and Casualty insurance

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Yet another area where an insurer can more efficiently manage coverage, is with the property and casualty (P&C) insurance. This is the area of automotive, home, and business insurance.

As CB Insights point out, P&C claims are distributed across many locations, and are controlled by various entities. This adds challenges to resolving claims. With blockchain, data can be processed and collected in real time, thereby making claims processing time three times faster, with a five-fold reduction in costs.

Because of the inherent contractual nature of insurance, contracts can be automated with blockchain technology smart contracts. The result is increasing claims processing speed and payout, and saving insurers over $200 billion every year. Insurees will benefit significantly with savings that are passed along, and increased efficiencies in claims processing.  (CB Insights)


While blockchain technology is still young, there are a number of use-cases for the insurance industry. Giant insurance companies like Allianz and Swiss Re—and smaller blockchain startups—are leveraging blockchain solutions. However, despite the significant interest in blockchain, there remains a good deal of needed research and testing before it can significantly impact the insurance industry.

As indicated earlier, the insurance industry is a trillion dollar industry. It covers nearly every area of one’s life from health and life, to covering any valuable asset or possession that one would want to protect against financial loss. It is an industry ripe for fraud and inefficiencies—making coverage more expensive and cumbersome for the average consumer to understand.

With blockchain, distributed ledger, and smart contract technologies—there is opportunity for the industry to drive the cost of coverage toward alignment with the benefits, thereby becoming more attractive to the aging millennial who now have greater insurance needs.



Adriano, Lyle, “Five important issues threatening the insurance industry”, Insurance Business, October 2018.

CB Insights, “How Blockchain Could Disrupt Insurance”, January 2019.

Mire, Sam, “Blockchain for Insurance: 10 Possible Use Cases”, Disruptor Daily, October 2018.


Eric W. is a self-educated ghost writer who for the past seven years has been involved in Blockchain, Cryptocurrency, and Digital advertising sectors as Project Director, Miner, and NRA (Network Resource Application).

Contact Eric


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