Blockchain technology is able to garner significant attention across sectors for its impeccable security features. The insurance sector can also be hugely benefitted with the implementation of blockchain technology.
The insurance sector is built around thousands of processes which handles pricing and risk management primarily. Implementation of blockchain technology can help in the effective management of data and processes that forms the foundation of a transaction in the insurance sector. Blockchain offers an immutable digital data ledger which allows users in a network to update and view the data without meddling with the existing data. The data is stored as blocks, where each block contains the address of the previous block, a timestamp, and the present data. Once entered, a data cannot be changed without the consensus of the majority in the network. Blockchain technology offers a distributed and decentralized system which allows data to be stored in multiple locations without a central system. The data in a blockchain network can be retrieved easily even if a system gets compromised in the network. In a nutshell, blockchain technology can be understood as a way of structuring databases that allows for increased security and accessibility.
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The insurance sector relies on multiple third-parties for a transaction who have access to their data. The effectiveness of blockchain technology in providing a highly secure platform to all the concerned parties in a transaction has lured insurance sector to adopt this technology into their processes. The blockchain platform allows third parties to access the information while keeping the data secure and correctly shared with right recipients.
While the Implementation of blockchain technology is still in its nascent stages, it has offered numerous benefits to the insurance industry. The technology is adequately poised to replace technologies like SQL database and cloud as-a-service model. Industry Analysts predict that a full-scale adoption of blockchain technology will take place in the insurance sector within the next decade.