Breaking the bottleneck, will the blockchain save 20% of the cost for the insurance industry? !

As a new generation of technology, the blockchain has many irreplaceable powerful functions, such as distributed data storage, point-to-point data transmission, etc.. Because of its immutable underlying logic, it also gives the blockchain plenty of room for development in many application scenarios such as traceable, certificate-saving, and trust mechanisms.

The Hashgard Blockchain team has built a complete set of blockchain systems based on blockchain technology, including a new generation of digital financial public chains, smart contract graphical deployment systems, token candy airdrop systems, equity incentive tokens system, blockchain wallet GARDBOX and many other products.

The Hashgard Blockchain is committed to achieving the landing of the blockchain, providing a “blockchain +” one-stop solution for traditional fields, physical enterprises, and Internet companies.

In this article, we will introduce in detail how the Hashgard blockchain provides a “blockchain + insurance” one-stop solution:

01 Status and Problems of Insurance Industry

Insurance is an industry that we often contact in our lives. Leading companies in the insurance industry, such as Pacific Insurance, China Life Insurance, and Ping An Insurance, are well-known giant companies. But hidden in the bustling background, it is an issue that cannot be underestimated in the current insurance industry.

a. The industry growth rate has dropped significantly.

The insurance industry’s premium scale in 2018 was 3.8 trillion, a year-on-year increase of less than 4%, while the insurance industry increased by 18% year-on-year in 2017, and the growth rate dropped significantly.

b. Intensified competition in the insurance industry

With the increase in the number of inbound companies, the competition for traffic has become more intense. As of September 2019, the China Insurance Association has 326 members, and correspondingly, the profit rate of more and more insurance company is falling.

c. Lack of innovation in insurance products.

The homogeneity of insurance products is serious. In the stock market game, competition is becoming fierce.

Breaking the insurance industry

Prior to this, the “Internet + Insurance” model was highly expected. Many people believe that the Internet will become a weapon that will shape the future battle of the insurance industry, and Internet insurance will successfully incubate new insurance giants. However, according to data from iResearch, the total premium income of the Internet insurance industry in 2018 was 188.9 billion yuan, which is basically the same as 2017. Its share is less than 5% of the total insurance industry’s 3.8 trillion, whether the volume or the growth has not yet reached the hope of breaking current situation.

So how will the insurance industry break the situation in the future?

Perhaps, “blockchain + insurance” can be a new idea.

02 Four pain points of insurance industry that can be solved by the blockchain

There are many pain points in the insurance industry, such as the pressure brought by the huge sales network, the situation that high-quality insurance products cannot be achieved overnight, but the blockchain is not a panacea, and it can only solve the pain points of the insurance industry from some perspectives.

In this article, we focus on four pain points that can be solved with the blockchain, which are as follows:

a. Lack of trust

The lack of user trust in insurance companies is not a matter of overnight, but has been accumulated over the years. It emerges because of complicated insurance terms, mismatched products and user needs, etc. At the same time, it is undeniable that the method of “family ground marketing” by the insurance sales staff at the primary level over past 20 years has also caused many people to have a certain degree of resistance to insurance, which ultimately led to a lack of trust.

Blockchain solutions:

Use blockchain and strong encryption to create an authentication infrastructure that can control complete insurance policies and insurance records, digital files containing basic information about the certificate, such as the issue date of the policy, policy payment rules and procedures, insurance records, etc. ; second, use the private key to encrypt and sign the certificate; next, create a hash value to verify that the content of the certificate whether has been tampered with;

Finally, a private key is used to create a record on the blockchain network again, proving that the certificate was issued to a user at a certain time.

For insurance companies, after putting the insurance policies on the blockchain, it will be more convenient for information storage and management. At the same time, because of the principle of distributed storage, even if hacked, information cannot be taken away, and only partial information fragments can be obtained, so attacking insurance information will become useless, which further ensure the security of information.

For the insured users, first, the insurance terms are easy to check on the blockchain; second, the claims process is disclosed on the blockchain without worrying; third, the authenticity of the insurance company can be quickly checked without the need to pay high cost for corporate checks. In the end, it will increase the users’ trust in insurance companies.

In practical applications, all operations such as information on the blockchain can be completed with one click, which is simple and efficient.

b. Deception and rampant insurance intermediaries

In recent years, many insurance companies have begun to experience declines in profits and lower profit margins. This is related to the emergence of insurance fraud and the increasing number of insurance intermediaries. The commissions of middlemen and the amount of insurance fraud have led to the difficult situations for some small and medium-sized insurance companies, even the giants of the insurance industry, have a headache with these two expenditures.

Blockchain solutions:

All fraud insurance and intermediaries essentially use information asymmetry to seek benefits from insurance companies.

For fraud insurance: The distributed ledger technology of the blockchain is used to distribute information in different blocks, and all nodes will publicize information suitable for publicity through confidentiality, keeping core information confidential. In the process, the user’s real information will be chained, the asymmetry of information may be reduced, the difficulty of fraudulent insurance will be increased, and illegal fraudulent insurance will have nothing to do.

For intermediaries: The purpose of traditional insurance intermediaries is to facilitate the completion of insurance policy transactions. However, in the framework of “Blockchain + Insurance”, insurance data is on the blockchain, and the form of on-chain hash values ​​is synchronized, leaving unalterable and well-defined data records. Users will face the insurance company directly without the need for an additional agent in the middle.

The total annual insurance fraud in the United States exceeds $ 40 billion, while the “Blockchain + Insurance” allows insurance companies to directly reduce the risk of being frauded, and allows insurance companies to face users more directly, reducing the middle parties of the original procedure “Insurance Companies -Insurance Intermediary-The Insured “, saving huge commissions for insurance companies.

c. Poor user claims experience

The insurance industry has a large number of insured users, and the procedures for reporting, determining losses, reviewing and investigating, settlement of claims are tedious, which consumes a lot of manpower and resources, resulting in low claims efficiency and poor user experience.

Blockchain solutions:

“Accepting the case → opening the case → preliminary examination → investigation → review → approval → filing of the case” is an insurance claim process that is currently in operation. It takes as little as a few weeks and as many months as it consumes a lot of manpower and resources, and the user experience is extremely poor.

If the blockchain is used, customers can easily place orders at their own portals on the platform, and later data is automatically updated. Not only can smart contracts convert paper contracts into programmable codes, but insurance claims automatically occur under smart contracts.

There are two major benefits of smart contracts for claim settlement. One is that the electronic invoice based on blockchain technology is used as a claim voucher. It will be timestamped during the entire process of generation, transmission, storage and use, which guarantees the authenticity of invoice, saves the manual review process, and greatly simplifies the claims process. The second is that the blockchain smart contract guarantees the openness and transparency of insurance contracts and terms. Once the claim conditions are met, the compensation process is automatically triggered, which greatly improves the user’s sense of gains and experience.

According to PricewaterhouseCoopers estimates, the use of blockchain technology in the insurance industry can save 15% to 20% of operating costs.

c. Outdated operation and lack of creativity in insurance industry

The insurance industry is gradually moving from an incremental market to a stock game, and new games such as “mutual protection” are emerging one after another. Insurance companies urgently need new games to consolidate the industry’s position.

Blockchain solutions we focus on two here:

Token Economy + Insurance: Change the mindset, so that past users are no longer just users, but become members of the insurance company’s “community”. By obtaining incentives for the contributions of insurance companies, “replace sales with users”, let users and insurance companies are growing in a win-win situation. For example, an insurance company can create its own token system through the Hashgard public chain and give corresponding token rewards based on the behavior of the insured. The entire token system will be established on the decentralized public chain, which can be seen on the entire network.

Enhance product flexibility: Blockchain can enhance the self-flexibility of insurance products and improve the efficiency of fund allocation. Insurance companies can use the on-chain information to segment the same insurance policy contract by time or region, provide product portfolios to deal with risks in different time frames, and provide temporary protection based on temporary changes in risk.

03 Hashgard Blockchain + Insurance Solution

The above mentioned how the blockchain can solve some of the existing pain points in the insurance industry. Then, how can the Hashgard blockchain fulfill the needs of the insurance industry and achieve landing?

We will mainly implement it from two parts: Research & Development, and token economy:

Research & Development fields:

The Hashgard Blockchain team has independently developed a complete set of blockchain technology systems, including a new generation of digital public chain, smart contract graphical deployment system, token candy airdrop system, equity incentive token system, blockchain wallet GARDBOX, etc. These functions and technologies can be used in the application of “Blockchain + Insurance”.

a. Hashgard public chain can realize distributed ledger

1) Distributed ledger technology shares, replicates, and synchronizes databases among network members (nodes), and any network participant can obtain a unique, true copy of the record.

2) All data changes in the ledger will be reflected in other copies. In the Hashgard blockchain, it only takes about 3–6 seconds.

3) The assets stored in the ledger can be logical or electronic assets, and the ledger records can be managed and updated by one or more participants.

b. The POS consensus mechanism of the Hashgard public chain is more efficient

1) At the beginning of each block, Tendermint pseudo-randomly arranges a validator to propose the block. After the proposal, it needs to be formally submitted as a block after 2/3 of the validators’ pre-voting and pre-submitting signature. If the submission fails, the protocol will reschedule a new validator to propose block.

2) Tendermint can tolerate failures below 1/3, including failures or malicious users

3) However, the block generated by Tendermint is finalized and the network will not be forked

c. Hashgard public chain achieves putting data on blockchain:

1) An insurance platform based on Hashgard public chain can be stored according to the data file type and data size

2) Data related to business document status, issuance, and important document deposit certificate are directly encrypted, put on blockchain, and signed on the application side

3) The data that does not involve the storage of important data and has a large storage space will store the original in the local server, and at the same time, encrypt the result of the file after hash calculation and the storage address, and upload it to the blockchain.

d. Smart contract of Hashgard public chain

The virtual machine Hashgard VM independently developed by the Hashgard blockchain team supports multiple dedicated smart contract functions, which can effectively support the realization of more complex financial services.

At present, HVM virtual machines have a series of functions including protocol instruction sets, random numbers on the chain, smart contracts can be updated and upgraded, and smart contracts can be automatically executed at regular intervals, which can be applied to insurance business in different scenarios.

04 Why choose Hashgard Blockchain

At present, the Hashgard blockchain team can provide developments of the blockchain main chain, blockchain virtual machine, blockchain smart contract, and token application system.

Product Case:

Hashgard public chain:

GARDBOX:

Smart contract deployment system:

Equity token incentive system:

Stronger Research & Development capabilities

More technical innovation and better application experience

Hashgard Blockchain looks forward to working with you!

-END –

About HASHGARD

Hashgard is a new generation of digital financial public chain invested first by Fenbushi Capital and BKFUND, followed by 80 well-known investment institutions. The public chain developed based on the Cosmos-SDK, the independently developed high-performance virtual machines to support multiple programming languages, and the implementation of cross-chain interaction through the IBC protocol, ultimately creates an open and highly scalable ecosystem. The public chain will promote the healthy development of the digital financial industry through technological innovation and ecological construction.