Distributed ledger technology apps and blockchain could offer insurance industry savings

Distributed ledger technology - Blockchain technology

A recent study showed that this approach could save the industry millions of dollars per year.

New research examined the way a consortium-based blockchain approach using distributed ledger technology (D.L.T.) applications could save the insurance industry millions every year.

The analysis was conducted by the Institutes RiskStream Collaborative.

The Institutes RiskStream Collaborative analysis examined the way taking a consortium-based approach to blockchain and distributed ledger technology could help two events in common within the property and casualty insurance sector. Those events are: first notice of loss following an incident and proof of insurance. Those two events both apply to auto insurance products.

“By implementing blockchain applications in the U.S. market, and taking the RiskStream Collaborative’s network growth into account, members could save between $19 million and $68 million in the first year of use, between $60 million and $190 million in year two, and between $99 million and $277 million in year three,” explained vice president Pat Schmid of the collaborative.

The collaborative’s paper on distributed ledger technology and blockchain identified substantial benefits.

The paper identified that first notice of loss is typically an exceptionally manual process directed by each insurance company involved. By using blockchain-based processes to coordinate in a central way, it could save the insurance industry as much as $14.4 million in claim intake. Moreover, it could save the industry an additional $28.8 million in data-sharing cost savings.

On the whole by using blockchain and D.L.T., it could overhaul processes that are traditionally manual and quite slow, bringing on an annual $43 million per year savings. Furthermore, the collaborative stated that processes based on blockchain could also save 1.5 million claim handling hours every year. That time is currently expended on data sharing between claims-information intake and carriers.

“Today’s first notice of loss process is complex, inefficient, slow and expensive for the wide range of parties involved,” said the president of the collaborative, Christopher McDaniel. He added that as there are over 8 million Distributed ledger technology - Blockchain technologyAmerican personal auto claims filed each year, blockchain and distributed ledger technology can eliminate “countless steps in this equation” as it decreases costs and enhances the customer experience.

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