How insurance blockchain can ease customers' burden

Life insurance companies assert that the blockchain being created has strict protocols to leave no room for manipulation and exploitation, or unauthorised use of customer data and personal information.

Illustration: Uttam Ghosh/Rediff.com

The insurance blockchain being developed by Indian life insurance companies will be used to store and share customers’ details in an encrypted and distributed format, with proper checks in place to ensure the consent of policyholders is recorded at various stages on to the ledger, say industry insiders.

A blockchain is essentially a ledger -- or a network of computers at multiple locations -- that are interconnected to share and receive secured data and information.

No one computer or ‘node’ in the network has control over the system.

All the data uploaded is dispersed across the network to ensure that no node has exclusive access to the data.

Life insurance companies asserted that the blockchain being created has strict protocols to leave no room for manipulation and exploitation, or unauthorised use of customer data and personal information.

They claimed governance mechanisms will be strong and the data will be shared only after the consent of customers.

Each user or node on the platform will have a public key and a private key.

The public key will be used to look at the ledger and to edit it the insurance blockchain will produce a specific private key for the requesting entity once the customer allows a company to receive his or her documents from another company.

Vivek Belgavi, partner and IndiaFinTech leader at PWC, said: “There are cases where increased coordination between companies could be helpful.

"On a standalone basis, the claims and damages of customers are closed within the insurance ecosystem, within the company itself.”

In January, 15 life insurance companies had come together to build the blockchain.

They chose IBM ISA as the information technology (IT) partner to design, build and help implement the project across the companies.

“The need for a common platform or consortium was to check overall history and data based on a type of vehicle or asset insured, across multiple players,” he said.  General insurers, for example, will be able to check across the industry whether the same asset was insured multiple times.

Life insurance companies in the country plan to implement the blockchain for on-boarding and claims management (or fraudulent claims detection).

“One related benefit pertains to the Know-Your-Customer details. If the nominee of a multiple-policy holder is the same and one insurance carrier has done the KYC authentication, another insurance carrier can check for it in the blockchain consortium and raise a consensus request from the nominee,” says Mohit Rohlani, CEO of IndiaFirst Life Insurance Company.

Regarding on-boarding, once the project ‘goes live’, there will be no need for a new medical check-up for every insurance policy a person seeks to buy.

The technology will give insurers access to verified medical records that were previously uploaded to the network.

“If all insurance companies have a seamless data flow with hospitals, the information will flow on a real-time basis.

"The customer will be saved the hassle of collecting documents from the hospital and sending them to the insurer,” says Anurag Rastogi, member of executive management at HDFC ERGO General Insurance.

General insurance executives told Business Standard that they have started talking to IT companies and the regulator to design and implement a blockchain platform for the same use-cases.

The insurance blockchain for on-boarding activities has completed the PoC (proof of concept) stage, with insurers saying within a few months they will be working with each other to iron out details related to the format of data to be uploaded, and some of the compliance and governance norms.