Data are the basis of any strong "know your client" (KYC) and anti-fraud function. Since multiple prospecting and on-boarding insurance processes are outsourced to third parties or dealt with entirely with digital tools, how confident are you in the accuracy, reliability and verifiability of data provided by your customers?
Blockchain technology provides brokers and carriers with a "truly effective" way to perform KYC checks, according to Bundeep Singh Rangar, CEO of the financial software company PremFina. The pure transparency and immutability of blockchain makes it very difficult for people to attempt fraudulent transactions.
"The blockchain lends itself very well to KYC insurance checks," Rangar said. "If a customer's ID is registered in the blockchain, it's very easy to verify, and if their digital wallet (used to accept and process payments via blockchain) is linked to that account, once again confirms that the customer is who they say they are.
"The KYC element, the payment item and to some extent the anti-money laundering element (AML) is much more transparent on the blockchain and can then add value and reduce costs for insurance companies. It will definitely reduce the costs of running KYC and AML checks because people can not pretend to be what they are not. "
Approximately 10% of losses for the insurance industry stem from fraud or fraudulent claims, Rangar expects this to be halved if insurers and brokers start to use a blockchain infrastructure to verify people and events. also described important opportunities to reduce administrative costs using immutable blockchain data to cut bureaucratic processes, in particular for claims processing and payment authorization.
For example, in the area of u200b u200b u200b u200b u200b u200b u200b u200b u200b u0026lt; parametric insurance – coverage such as flight delay insurance, which revolves around an easy-to-determine metric or index: verification of requests and processing payments can be automatic and almost immediate. identify that the applicant has the right insurance policy and that the correct trigger (eg a three-hour delay) has taken place, after c he will effectively transform into a Smart Contract and can process an automatic payment.  "There are huge efficiency gains to be achieved using a blockchain infrastructure", said Rangar to the insurance industry . "Not only is it able to improve KYC and AML processes, it also allows certain types of agreements made much more efficient and viable using Smart Contracts triggers through verifiable and unquestionable events recorded on the blockchain: the difference between complete automation using technology against the use of blockchain is that the blockchain is transparent, verifiable and immutable. "