Blockchain technology is still complex for many, yet innovative fintechs believe it can provide solutions to make car insurance coverage generally affordable.
The vehicle insurance underwriting process entails evaluation of the risks and exposures that potential clients present, in line with the coverage being sought as financial protection in case the need arises. However, given the numerous factors that can increase risk levels, even the minimum bodily injury and property damage liability insurance can become costly for a car owner
While such factors cannot be ignored in risk assessments, it often takes underwriters a long time in gathering information. Time for making timely adjustment of policies near the national average cost of insurance is crucial. Otherwise, with many car insurance companies quoting insurance rates daily, a slow assessment may come up with a quote that is no longer competitive when matched against the current national average insurance cost.
In What Ways Can Blockchain Technology Help Insurance Providers More Competitive?<?strong>
Since blockchain technology works by way of a shared but secure ledger, car insurers will be able to track the frequency by which claims are being made for an insured vehicle. It’s one way of knowing the driving history of a client, which if demonstrating favorable or unfavorable results, will justify the need to adjust the insurance policy accordingly. .
Moreover, blockchain technology can make fraudulent car insurance claims impossible to perpetuate. In having other actors such as brokers, competitors whether insurers or reinsurers participating in blockchain operations, there will be available and relevant data that have been stored and shared in the blockchain ledger.
When it is easier for insurance companies to monitor factors that can contribute greatly to the cost of a car insurance, the faster it will take for underwriters to complete assessments that insurance clients will regard as cheaper by comparison. After all, comprehensive car insurance information are now easily accessible at insurance info websites like Car Insurance Near Me, making it possible for vehicle owners to collect data with which to compare their existing policy.
This greatly matters since a typical insurance coverage is only for a year, denoting that at the end of a term, clients will decide whether or not to renew their coverage with the same provider. Some clients, even if seemingly satisfied with their existing insurance provider, still prefer to shop around not only for cheaper rates, but also for insurance providers that can offer discounts as incentive for safe driving.
In most cases, those that occasionally use their vehicles discover that they can lower their insurance costs by opting for the Pay-as-You-Drive Insurance coverage. Through blockchain technology, insurers would be first to offer this option instead of letting such clients slip away. Through the shared blockchain ledger, insurance firms will be able to take note of clients who spend relatively few hours driving or exposing their vehicles to potential risks.
Insurers who immediately recognize such a trait in their clients will be able to develop cheaper policies and give them the edge of offering a “pay-as-you-drive” option ahead of their closest competitors. .
At IBM’s Global Blockchain Services, Global Manager Jason Kelley, strongly believes that blockchain technology gives people empowerment as they are able to exchange values without the need to disclose identities. The system is simple, transparent and safe to trust, while getting rid of all the costs and time wasted when trading values through conventional methods.