Blockchain gets real for Singaporean insurance platform
SINGAPORE digital insurance broker PolicyPal and online insurer FWD are partnering to bring blockchain to insurance.
The insurance sector has been actively exploring uses of blockchain since 2016. Various organizations, including EY, CB Insights, Blockchain council, and IBM have outlined the many uses of blockchain in insurance.
This isn’t surprising. According to PwC, blockchain can help insurers get US$5-10 billion in cost savings.
Blockchain makes key areas of insurance, including underwriting, claim settlement, and detection for fraud and abuse. The decentralized nature of blockchain, means customers and insurers alike have a transparent view of all the data.
With easier access to information, insurers can reduce delays when dealing with underwriting processes and claims. It helps insurers assess risks accurately, even with different sources of information, thus reducing costs of operations.
PolicyPal’s approach is slightly different. Instead of integrating blockchain into existing systems, it is redesigning insurance offerings. The company runs a digital platform that helps customers buy and manage insurance through a mobile app.
With PolicyPal Network, the company is building a peer-to-peer mutual aid insurance model. This means the unbanked population will be able to get insurance cover, even without the bank acting as an intermediary.
Applying a risk assessment model on real-time data, this means risks assessments of premiums and coverage is more transparent and accurate. This enables the blockchain powered platform to provide more affordable insurance premiums and higher aid limits.
In this partnership, FWD will be developing and offering products specially designed for the blockchain marketplace.
“We look forward to capitalizing on FWD’s regional reach to bring our products to countries in Asia. Our aim is to bridge the gap between consumers and insurance providers, and provide unbanked masses in the region with essential insurance coverage,” said Val Ji-Hsuan Yap, Founder and Chief Executive Officer of PolicyPal Network.
For its customers, PolicyPal Network offers cashback incentives on premiums for community members that did not make claims at the end of the insurance period. This will reduce liability for insurers, as well as fraudulent claims.
Other players in insurance opted for a different approach. IBM, for example, has been developing its blockchain platform to optimize operations of existing systems. Working with AIG and Standard Chartered, it implements a “smart” insurance policy to manage complex international coverage. China Construction Bank (Asia) in Hong Kong also uses a similar system for its bancassurance operations. The platform gives a shared view of policy data, thus reducing delays.
Besides individual efforts, 15 players in the industry internationally are also collectively working towards realizing the potential of blockchain. The Blockchain Insurance Industry Initiative (B3i) was founded in October 2016, aiming to improve transaction efficiency with blockchain, reducing delays and providing a better customer experience.
Although initially meant as a collaborative initiative, B3i has since spun out as an independent company. It has now developed common standards and insurance solutions on a blockchain platform, ready to be rolled out market wide.
If that’s any indication of where blockchain is headed in the insurance space, we will be seeing blockchain becoming integral for providing a better customer experience.