Fitch Ratings Believe Blockchain Could be Massive for the Insurance Industry
Blockchain in the Insurance industry
Blockchain technology can be used in any sector because of its convenience. However, one area that has not been talked much about is the insurance sector. According to a report published yesterday, “insurance is a very fertile area for Blockchain’s Capabilities.” According to Fitch Ratings, Blockchain can be used in streamlining transactions that are conducted by insurance companies as well as simultaneously reducing the instances of fraud based on a press release posted alongside the report which was not public at the time of the press release.
Fitch ratings went on to clarify that the benefits could be long-term and could be felt in the next three to five years and that the short-term effects could be few right now. More to that the technology is likely to affect the credit ratings of the affected firms before that specific time.
According to Fitch:
“Cost reduction and efficiency could be achieved when there is a reduction of reconciliation and audits. More to that certain processes can also be automated thus improving the access of data. If insurance companies focus on Blockchain, they could save about 15 percent to 30 percent on their annual current expenses according to estimates from Pricewaterhouse and B3i.”
Fitch we on to say that the uncertainties experienced around the nascent technology remain pronounced. One thing is that it’s not clear how widely the Blockchain technology will be adopted and it’s not also well known whether the pay-offs of using a platform build around blockchain will outweigh the initial investment.
Fitch added that: For Blockchain to receive wide-scale adoption, there are numerous regulatory, legal and security issues that should be addressed. However, the adoption in the insurance sector will depend on specific groups in the industry adopting the technology to gain a competitive advantage over the others while reducing operational costs.