Insurance and Blockchain, “Next Big Thing?” The rise of AssurTech – Bitcoin – Bitcoin 2020

The insurance industry is changing more than ever. For several years, the “AssurTechs” have revolutionized insurance codes with ever more services, more innovative and in line with the need for immediate consumption in the 21st century. We have also recently seen the arrival of smart contracts. A small revolution made possible thanks to Blockchain. Blockchain-boosted insurance could thus reshuffle the sector’s cards and deeply impact a multi-secular economic sector. But what are the benefits, both for insurance companies and for customers? We take stock.

AssurTech: from digitalization to the blockchain insurance revolution

The concept of insurance is almost as old as the concept of contract. Indeed, very quickly after the first “deal” between two individuals, it is imposed the need to hedge against the risk of default of the contracting parties.

From the 2nd millennium BC, the Babylonians had thus set up devices, fundamentally not very different from our current insurance policies. That is to say if the subject does not rejuvenate us.

However, the insurance sector has been shaken for several years by the emergence of a set of technologies and new practices that profoundly upset the somewhat old-fashioned image of the sector.

AssurTech, a new distribution model

AssurTechs probably embody one of the biggest upheavals in the insurance industry.

Not wishing to reinvent the wheel – well not too fast – however, this is not on the insurance product as such that the startups of the sector have for the moment decided to devote their efforts, but rather on how to distribute them.

Today the insurance contract boosted by the assurtech differs not with their products, but rather on deployed technologies to optimize these and streamline the customer experience: Big Data, blockchain, AI …

In this concert of innovation, the company Assurup, positioned itself so that it could “Industrialize tailor-made” thanks to its algorithm. By establishing the risk mapping of each company, this AssurTech offers professional insurance contracts adapted to each of its customers and perfectly calibrated to their needs.

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The insurance of tomorrow is also digitization full insurance. Possibility of insurance in less than 5 minutes, online claims handling, chat or customer service available 24/24 … these 3.0 insurance have everything to seduce.

AssurTechs rethink customer journeys. From distribution to underwriting and advice, while going through daily management and compensation, everything is redesigned to simplify, streamline the customer experience.

It is thus by developing new uses and mastering the most advanced technologies that AssurTechs are changing the somewhat archaic face of insurance.

In France, the assurtechs are from more and more. The number of startups increased from 106 to 187 between September 2018 and September 2019 according to KleinBlue Partners. But what is the typology of French assurtechs? Still according to KleinBlue Partners, 53% are services to insurers and brokers, 36% are brokers and 11% are insurances (collaborative, on demand…).

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Distribution of AssurTech in France by sectors

In 2019, all of the world’s AssurTechs raised almost € 6 billion. A number which slowly begins to make you dizzy. If this market is naturally dominated by United States, Europe is not to be outdone. Over € 800M was invested in European AssurTechs in 2019.

The impact of blockchain on insurance

The time is right for a disruption of even the most traditional sectors Consumers have never been more in demand for more solutions reliable, more fast and more automated, the insurance world is also experiencing major changes. And it’s – as often these daysthe blockchain that could lead the way.

Although most organizations associate blockchain technology with the industry finance, it is also nowadays more and more used in the insurance sector and in particular via smart contracts.

Smart contract for Intelligent Insurance

These smart contracts are materialized by computer protocols running on the blockchain. These solutions provide many benefits, both for insurance companies and for customers.

Smart contracts, the magic formula of assurtechs

This technology notably promotes dematerialization part of the process. This allows insurers to reduce operating costs and associated management costs. In other words, a large part of the processes are automated, which considerably reduces human intervention. As a result, insurance companies will benefit from a cost reduction of 5 to 15%, which could decrease the amount of customer premiums.

These smart contracts eliminate the need for human management and significantly reduce the risk of errors. Contracts are coded to communicate with each other in order to exchange information. This allows in particular to keep them up to date with the most recent information via entry points to the real world, named “Oracle“.

Claims management is also simpler and faster. Blockchain allows to automate the process of validation of certain claims, by listing and by defining compensation, all without the slightest human intervention. No more waiting several weeks or even months to get compensated. Customers will be reimbursed almost instantly.

In addition, the placement of sensors via deployment of connected objects in our daily lives (like at home or in the car), offers the possibility of being compensated almost immediately. The sensors (integrated in the connected objects) make it possible to measure the claims and to send this information to smart contracts, thus automatically triggering compensation.

The icing on the insurance policy, smart contracts also allow for more in-depth knowledge of customers, particularly in the context of discussions between stakeholders in the sector (brokers, insurers, banks, etc.). An insurance company can therefore offer personalized contracts with a high added value for each of its customers, whose needs and expectations are known thanks to the blockchain. In addition, customers no longer have to do anything, thereby increasing their satisfaction.

Through the use of smart contracts, insurance services will become more flexible, but above all faster. Blockchain offers the possibility of learning from past contracts, understanding the risk-taking capacity and finally create adapted and evolving contracts

According to a recent study by the French Insurance Federation and PwC, “56% of insurers recognize the potential of the blockchain, 57% do not yet know how to exploit it”. So there’s a long way to go before this technology is fully introduced in the insurance industry. Maybe it is the day after tomorrow?

Insurance and Blockchain, “Next Big Thing?” The rise of AssurTech – Bitcoin – Bitcoin 2020
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