Brendan Sanford 
As is often true with change, more remains the same in both cryptocurrency and insurance worlds.
Well-established banks and digitally native fintechs alike are increasingly turning to embedded insurance as an innovative method to incorporate relevant risk protection into customer experiences and thus expand revenue streams without adding friction to transactions.
Blockchain
Blockchain is an immutable ledger that eliminates data inaccuracies, reduces transaction costs and streamlines claims management processes. Furthermore, customers gain real-time access to their policy details which increases customer satisfaction and retention rates.
Blockchain can automate know-your-customer (KYC) and anti-money laundering processes to verify bank accounts and other financial data. Furthermore, insurers can offer claim submissions with reduced handling costs while being able to verify identities by multiple parties in an automated and auditable manner.
Finally, blockchain can be leveraged to execute smart contracts to expedite claims processing and enable parametric insurance products. These self-executive programs stored on the blockchain only activate when certain conditions have been fulfilled – creating an efficient and secure environment for all stakeholders involved.
Smart Contracts
Intelligent contracts have quickly become the talk of the insurance industry for good reason: they provide an efficient means of processing claims, minimizing fraud incidents, and building customer trust.
Utilizing blockchain technology, they automate customer risk scoring, policy issuance, claim validation, regulatory reporting and other rule-based processes that were previously performed manually. They also have instantaneous intake and validation from corporate systems as well as external sources.
Smart contracts not only reduce operational costs for insurers, but can also expand their product offering by making parametric policies easier to offer – ones which pay out when predefined conditions are fulfilled without human interference – which would greatly lower premiums and have all data stored securely on an independent blockchain that only the insurer and approved third parties have access to.
Crypto Mining
Blockchain technologies could offer insurers new ways to enhance their services. Smart contracts could help insurers automate this verification against reliable external pools of data such as airline flight delays, weather conditions or health care assessments.
Insurance firms looking to join the digital asset ecosystem must take security seriously, especially as its maturity progresses and cryptocurrency assets become even more vulnerable to theft and fraud.
Insurance companies with advanced teams dedicated to digital-age risks have established dedicated teams dedicated to managing these risks, conducting experiments, testing proofs of concept, creating innovative policies, partnering with wider consortiums for interoperable data repositories development standards as well as making partnerships between these efforts and traditional competitors’ future proofing their business against nontraditional threats. This could help reduce costs, boost revenues and protect their business against nontraditional disruption from nontraditional competitors.
Security
Every crypto-based business needs a strong security system in place. This must include protocols for the recognition, evaluation and mitigation of risks related to cybersecurity, operational hazards and adherance with industry norms. Hiring impartial specialists such as cybersecurity companies, forensic auditors or attorneys is also invaluable in providing insight and confirmation on insurance coverage, security measures or standards and regulations compliance.
Custody insurance protects digital assets against theft, a growing risk as cryptocurrency values continue to surge. Typically provided through either crime/fidelity markets or specialist’specie’ markets that provide coverage for high-value items like fine art, bullion and jewellery while in storage or transit.
Financial organizations are increasingly including insurance in their products and services to build customer trust, increase revenue and open new opportunities. A recent survey discovered that 81% of executives involved with decision-making processes regarding embedded insurance believe it will soon transform from being nice-to-have into something essential.
