Smart contracts: What can they contribute to the insurance sector?

The applications of Blockchain are not limited to cryptocurrencies alone. They are instrumental in various aspects of business - one of them being insurance. A highly practical advantage of blockchain is found in smart contracts. These automated contracts have the potential to completely and positively alter the processes involved in insurance. It is common knowledge that manually handling insurance claims, paying of premium, weeding out fraudulent claims, and other related processes can be time-consuming. Blockchain smart contracts are self-executing and can, therefore, provide insurers with a convenient way to simplify these arduous tasks, by digitizing and automating them.

Some of the major ways blockchain, especially smart contracts, can transform the insurance business are:

• Eliminates the need for paperwork

With all the automation involved, smart contracts eliminate the requirement for any paperwork. This is a major benefit as generally, paperwork pertaining to the insurance sector is not brief. Enabling processes to take place digitally can give both the insurers and the insured some peace of mind.

• Easily identifies fraud

Smart contracts work on blockchain technology, known for its immutable data storage and transparency. Therefore, detecting fraudulent activities can be carried out easily. There is no transaction that goes untraced on the blockchain. For this reason, it is impossible to play hide and seek with the law.

• Efficient claim processing

Smart contracts enable claims to be processed efficiently, thereby creating a more effective system on the whole. Since the process is not manual, it can be carried out in no time.

• Reduces costs

Smart contracts help reduce costs for both the policy provider and the one who purchased the policy. The insurer can save on administration costs as most processes are computerized. Also, as fraudulent claims are easily detected, there is no chance for the insurance company to be scammed. From the policy holder’s perspective, claim payments take place faster, unlike manual processes that could take days or sometimes even months.

All things considered, smart contracts present themselves as a real solution to the currently inefficacious industry sector. Want to speed up your own insurance processes? Get in touch with Blockchain App Factory for advanced smart contract application development services.