Insurance Firms tap Blockchain for Ease of Transaction

Thirteen Indian insurance companies have come together to use a blockchain-like technology to create a central repository of policyholder data, so that insurers need not repeat the registration procedure for multiple policies.

“When the same records are available to a number of life insurance companies in a chain, the cost incurred by them is lower compared to what it is when they were all separately conducting tests and storing records,” said Akshay Dhanak, vice-president, business systems & technology at HDFC Life Insurance. 

A whole lot of work has to be done in know-your- customer, medical underwriting, financial underwriting, etc, when a customer buys insurance, he said. Duplication of these procedures can be avoided by having the entire data set on blockchain. Blockchain is like a digital ledger used to store information of all cryptocurrency transactions. In this particular case, it takes the form of a distributed and decentralised method of storing information based on mutual agreement of members. PwC’s Global Fintech Report 2017 expects 77% of financial technology institutions to adopt blockchain as a process by 2020, with payments, fund transfer and digital identity management being the top areas of usage.

“Any new concept needs to progress sequentially,” said Mohit Rochlani, chief operating officer, IndiaFirst Life Insurance. “Any collaboration is taken apprehensively across industries because it constitutes data sharing as well as process sharing. There are also regulatory concerns regarding data privacy that need to be addressed.” Once the procedure evolves, he said, it would be advantageous in cost reduction and improving efficiency.