---
title: Improving Insurance with Blockchain Technology
description: Insurance protects property, assets, health, and professional services by providing “safeguards” against liabilities and increasing social inflation. Although the insurance industry has evolved to accommodate more extensive coverage, back-office operations have failed to keep pace, with slow claims processing and siloed departments hindering efficiency.
image: https://www.ar.ca/hubfs/Improving-Insurance-with-Blockchain-Technology.png
---

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# Improving Insurance with Blockchain Technology

[![Anthony Bufinsky](https://www.ar.ca/hubfs/Anthony%20Bufinsky.png)](https://www.ar.ca/blog/author/anthony-bufinsky)

 Written by [Anthony Bufinsky](https://www.ar.ca/blog/author/anthony-bufinsky)

 May 13, 2022

**Introduction**

Insurance protects property, assets, health, and professional services by providing “safeguards” against liabilities and increasing [social inflation](https://www.agcs.allianz.com/content/dam/onemarketing/agcs/agcs/reports/AGCS-Liability-Loss-Trends-2020.pdf). Although the insurance industry has evolved to accommodate more extensive coverage, back-office operations have failed to keep pace, with slow claims processing and siloed departments hindering efficiency. Blockchain technology’s automated, decentralized, and auditable capabilities have the potential to optimize the insurance industry by improving accuracy, interoperability, and recordkeeping. 

**Automation → Improves Accuracy**

According to [TigerConnect](https://healthitsecurity.com/news/90-healthcare-providers-still-rely-on-fax-machines-posing-privacy-risk), 90% of health insurance companies still use fax machines—one of several unproductive processes that increase the likelihood of human error, leading to the potential for significant financial loss. For example, in 2016, United States businesses lost approximately [$1.8 billion](https://www.bizjournals.com/phoenix/news/2018/11/15/outdated-technology-costs-businesses-more-than-it.html) due to outdated technology and inefficient operational functions. [Smart contracts](https://www.ibm.com/topics/smart-contracts), computer programs stored on a blockchain that run when pre-conditions are met, enable businesses to automate agreements and workflows.

‍Benefits of Automation in Insurance:   
**● **Provide immediate service and payment for policyholders who meet requirements  
**● **Automate [claims handling, accounting, and adjusting](https://www.captiveinternational.com/contributed-article/five-amazing-realities-about-blockchain-and-captive-insurance)  
**● **Detect fraud or potential risks to mitigate financial losses

**Decentralization → Improves Interoperability**

Insurance companies are robust enterprises with multiple departments, often leading to [transparency issues](https://scholarship.law.umn.edu/cgi/viewcontent.cgi?article=1582&context=faculty_articles) regarding customer interaction, pricing, policy changes, and company processes. Decentralized features of [private blockchain networks](https://101blockchains.com/private-blockchain/) ensure that all information is accessible to approved internal stakeholders. Companies such as [J. P. Morgan and MetLife](https://www.euromoney.com/learning/blockchain-explained/the-rise-of-private-blockchains#:~:text=And%20several%20banks%20and%20insurance,and%20potentially%20been%20less%20secure) have already implemented private blockchain networks to help verify transactions and send internal documents. Additionally, decentralization promotes [trust and open data sharing](https://insuranceblog.accenture.com/ultimate-guide-to-blockchain-in-insurance) for better company culture, collaboration, and interdepartmental communication. 

 Benefits of Decentralization in Insurance:   
**● **Answer company, client, and policy questions efficiently   
**● **Obtain visibility into transactional history   
**● **Pinpoint claim or document bottlenecks  
**● **Immediately update stakeholders with new or amended information 

**Auditability → Improves Record-Keeping**

Between 2015 and 2020, car insurers such as Farmers Insurance, The Hartford, and Liberty Mutual Insurance reported [27% decreases](https://www.moneytalksnews.com/car-insurers-losing-the-most-customers/) in their customer bases due to discontent with services. Because outdated insurance filing systems present documentation challenges and often lead to lost paperwork and increased resolution times, policyholders become disillusioned. An internal, auditable ledger would provide an innovative means of securely documenting data, thus helping to improve customer service. 

 Benefits of Auditability in Insurance:   
**● **Traceable transmission of [electronic records](https://www.munichre.com/us-life/en/perspectives/underwriting/blockchain-implications-insurance-industry.html)  
**● **Recording and accessing information for underwriting  
**● **Preparing for compliance and audit mandates

**Conclusion**

Insurance is an industry primed for technological integration. Following decades of stagnant operating procedures, blockchain can improve how insurers maintain and transfer records, manage risk, execute transactions, and interact with key stakeholders. As a result, organizations that adopt blockchain technology will be better equipped to improve operational efficiency, support clients and claims, reduce costs, and increase profits. Moreover, as insurers experiment with the ways blockchain can optimize current business models, we believe they will ultimately evolve to create entirely new types of policies, innovative processes, and streamlined services with blockchain technology at their core.

 

 

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Disclaimer: This commentary is provided as general information only and is in no way intended as investment advice, investment research, legal advice, tax advice, a research report, or a recommendation. Any decision to invest or take any other action with respect to any investments discussed in this commentary may involve risks not discussed, and therefore, such decisions should not be based solely on the information contained in this document. Please consult your own financial/legal/tax professional.

Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed are those of the author, and are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. Arca disclaims any obligation to update or revise any statements or views expressed herein. Past performance is not a guarantee of future results and there can be no assurance that any future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which is believed to be accurate, but has not been independently verified. Arca and/or certain of its affiliates and/or clients may now, or in the future, hold a financial interest in investments that are the same as or substantially similar to the investments discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and Arca and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities, or a solicitation to provide investment advisory services.

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