The insurance sector has always been one of the integral industries for the world. It is the sector that provides a shield of assurance to people, groups and organizations as they progress in their endeavors. It provides a sense of security and relief to people during the times of stability and protects them during times of crises. However, the insurance programs are as effective as the transparency of the insured entities. The insurance companies not only function based on calculated probabilities, but also on trust in the customers. In case the customers don’t show honesty while availing the services of the insurance companies, the latter may end being swindled for money and can risk losing huge sums which could have been premium-based earnings.
Customers tend to lie or conceal information in their insurance applications, though insurance companies rely on rigorous mechanisms to verify each and every detail about the customer. The insurance companies may still fail to find out the granular details of the customer or the magnitude of wellness that the customer is in. An example of the same is health insurance. Insurance companies try finding out all the details of their customer – they ask for any history of illness, they check medical records and they also record the well-being of the customer. And yet, the customers can defraud the insurance company by surfacing fake or doctored medical reports, just to project themselves as hale and hearty, in order to enjoy lower premiums. This is certainly a big challenge for the insurers as they won’t be able to charge the right premium and will also be enrolling a risky customer. As a result, insurance companies need a much more robust mechanism to track the health of the customers and gain much deeper visibility into their well-being. Blockchain and IoT show promise in this very area, for the purpose of transparency and real-time tracking, helping the insurers charge the right premium.
Connected healthcare for insurance
There can be hardly any better way of keeping a track on customer’s health than to monitor it in real-time. Or if that’s time-consuming, then insurers must at least try for having visibility into the health record of its customers. A good way is to leverage the health data collected by the wearable health-related devices. Customers using wearable gadgets to monitor their health upload a huge wealth of data on the cloud to get personalized recommendations. The insurers of tomorrow can collaborate with the health data managing companies, and with the consent of the customers, the data can be analyzed to see if the customer is a risky one or a healthy one.
A very similar concept goes for the use of Electronic Health Records (EHR) of patients. In the developed countries, and also in some developing nations, doctors upload patient information on cloud in the form of EHRs. These EHRs can give much granular visibility on customer’s health and can also prevent any scope of data concealment by the customer. When a person visits a doctor, he registers with a unique tracking ID. The doctor also carries a unique tracking ID. Post the consultation phase, doctor enters illness details, prescription details against patient’s ID in a distributed ledger for security reasons. The patient gets mobile notification about ledger update & approves the same. All the health-related details get appended in the ledger. At the same time, predictive analytics run on the real-time health data generated by the wearable devices and it suggests checkups and treatments, if required.
However, what is of interest to the insurance company is the volume of raw data that is generated every day and which also suggests if checkups are recommended. This gives a fair idea of the risk-profile of the customer and helps the insure map the customer to the correct premium bracket. Those with history of medical illness can be charged higher premium and can be provided with better policies. The insurer of tomorrow will much more granular data at its disposal and will be able to see through the lies of the customers, thereby having a much more transparent system for insurance. Moreover, the customers will also know why they have been charged a particular premium.
Blockchain brings stakeholder alignment
The customer also loses any scope of tampering the health records because of the security layer provided by the blockchain network. The customer by himself cannot alter the health records since it will require permission of the hospital authorities and the doctors. The customer cannot hope to conspire with any new doctor to fake a health report, since the validation algorithms will spot the sudden anomaly in the health trends and will alert the previous doctor of the sudden improvement in health parameters. The old doctor or its hospital authorities are anyways not going to approve the block unless the customer is tested again by them for validating the new health parameters waiting for upload. In short, the customer will fail to tamper his health data and will have no other option than to be honest with one’s details.
The customer will also be assured that the insurer changes no terms or policies without his consent. Any attempt to tamper with the block in the distributed ledger will result in an alert to the customer, which will be instrumental in raising an alarm in case the modification is uncalled for. Furthermore, the new policies will not come to effect unless the customer approves them.
All such actions will be supported by smart contracts, which will accept actions from all the concerned parties and then will execute automatically to implement the changes or to bring the contract to force. Customers and insurers will also have tamper-proof evidence in times of litigation, and there will be no hassle for the lawyers as all the case-relevant details will be fetched from the blockchain to which all parties will have access.
Final thoughts
Insurance of the future will be much more transparent and data-driven, compared to today. Insurance companies will have better visibility on their customers and will be able to charge the right premium, while customers will be assured of getting the right policies that both parties have agreed upon. Connected healthcare driven by IoT, wearable devices and blockchain will be the future of insurance.
