From trade agreements to currency conversions, it’s no surprise that there are plenty of potential points of failure and occasional errors in the insurance system. Platforms like Pattern Trader have a robust algorithm that performs the research for bitcoin traders and makes trading easy. Also, it helped many beginners to get started with bitcoin trading. Smart contracts – non-legally binding agreements between parties that set out a set of obligations.
If an insurance company wants to reduce the risk and fuel its growth, implementing smart contracts can help the company save time and money by eliminating paperwork, streamlining processes, plus enabling more secure transactions with reduced chance for fraud.
International trade requires many third-party agreements to govern the movement of goods, services, and associated data. While some agreements are simple and can be concluded through e-mail, shipping documents, or even blockchain, others are long and drawn out – such as trade agreements for pharmaceuticals.
Challenges in the insurance industry:
At least once a year, international insurance companies will send all the required documents to their insurer partners based on changes that have taken place since the previous agreement. Moreover, many transactions occur outside the insurance industry – most often with customers who have never purchased insurance.
When a customer calls to make a purchase, the agent needs to reconfirm the requirements and ensure that the customer understands what they are buying. It means that contracts with partners and customers often change hands multiple times.
What if there was a way for smart contracts to be launched when necessary? And, to put them on paper less frequently? For example, insurance companies can minimize their need for paperwork by using intelligent contracts as their standard business agreement. Instead of signing one long document at the beginning of the relationship, which could become outdated quickly, insurance companies could launch smart contracts when specific information needed for new risk assessments is available.
No counterfeit policies:
One of the most significant risks of insurance fraud is falsified policies. A few years ago, a prominent Canadian insurance company discovered that 30% of its policies were counterfeit. It turned out that the people who were selling them had used photocopies of fundamental insurance policies. It created a massive headache for the company, not to mention all the customers it had defrauded. By using smart contracts, there would be no need for printing or photocopying – the only thing people would require is a digital copy of the policy.
Between all the changes in policy wording and adjustments to terms and conditions, there is a lot of paperwork to fill out when you sell an insurance policy. It is especially the case for international trade, where companies in several languages must sign contracts and send a document to the customer. In addition to the standard paper documents, insurance companies often have to send scanned documents or ask customers to e-mail them.
By using smart contracts, it would be much easier for both parties because there would be no need for paper contracts. Instead, the customer could download a digital copy of the policy by logging on to their app while receiving an instant notification in their inbox if companies required changes.
Unexpected risks 100% backed by insurance:
It can be a challenge to know whether an unexpected event, such as an earthquake, will have a direct financial impact on your business. For instance, if you have an earthquake insurance policy covering your building and not your equipment, you would likely lose financially if the earthquake damaged your equipment.
To help with this kind of risk, smart contracts could be connected to the blockchain so that until the original terms are met, there is no gap in coverage for unforeseen circumstances. In addition, there would be no need for expensive property or extended warranties which will only come back to bite you later when you need them.
Eliminate paperwork errors:
At certain stages of the transaction, there is a risk that a paper document could become outdated and no longer reflect the current situation. The most significant risks here are with international trade, where transactions can take weeks, even months, to process. In addition, if an insurance company doesn’t discover an error in documents, there is a risk that a policy could be written so that it covers something it shouldn’t. If this happens, your business can face financial losses because you took out an insurance policy that was not supposed to cover something important.
True risk assessment:
One of the biggest complaints from insurance customers is that the company always seems to find a way to avoid paying out on claims. While there are legit reasons for this, too many times, a policy that fails to meet your needs is sold to you. If your agent sells an insurance policy to you without accurately determining what you need, there is a good chance that you will be left with an inadequate policy.