Blockchain-based insurance may help validate contracts and blockchain insurance startups are working on smart-contracts for forcing the execution of its terms. Insurance is a procedure of making individuals financially protected against losses occurring in the event of some damaging accident. Most insurance policies for individuals are homeowners, health, auto and life insurance. There are also insurance policies for businesses and financial institutions against specific types of risks that are inherent in the industry. The blockchain insurance industry is a rapidly-growing segment of the fintech industry and is gathering a lot of attention from investors.
From the recent news on September 1, The People’s Insurance Company of China (PICC), regarded as one of the largest insurers in the world, with over $126 billion in assets has recently partnered with DNV GL and VeChain to bring blockchain technology to the insurance industry. People's Insurance Company of China (PICC) basic motive behind this move is to make their business more time and cost efficient. Also, the new partnership would focus to improve fraud prevention, Know your Customer (KYC) compliance, as well as the claims experience.
PICC further said that blockchain technology will bring digital transformation to the insurance industry, which will reportedly create an "instant compensation" for companies by offering a more profitable business model.
The Chinese insurer is confident that distributed ledger technology (DLT) can streamline several key processes, reduce fraud, and ensure KYC compliance. Today, most insurers apply legacy claim management solutions that require a lot of paperwork. This often leads to inefficiencies related to data collection and verification. A digital system like blockchain, which ensures the transparency and security of transactions and data operations, would speed up processes and eventually would cut costs.
The VeChainThor Platform will assist PICC with expanded data management and more effective data processing, while DNV GL will guarantee the insurance system’s data integrity as an independent third-party assurer. VeChain’s recently launched public blockchain solution, VeChain Thor, offers corporate clients tools and services to manage their assets and streamline supply chain management processes, especially by applying smart contracts.
According to Sunny Lu, VeChain co-founder, “Collaborating with PICC expands our business within the insurance industry. We are confident we will provide great service and products to PICC, together with DNV GL.”