Blockchain Market in the Insurance Industry - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The Blockchain Market in the insurance industry is expected to register a healthy CAGR of over 63.4% during the forecast period. Blockchain technology is assisting the insurance business in drastically changing operations, offering a wide range of advantages like lower costs, improved customer experiences, increased productivity, increased transparency, and more. This will create massive opportunities for the fintech sector as well as for insurance companies that are willing to embrace the change.

Key Highlights

• Some of the new ways the insurance industry is starting to use blockchain technology are P&C Claims Settlement, the Internet of Things (IoT), index-based livestock insurance programs, catastrophe swaps and bonds, market investments, financial auditing and reporting, flight insurance, automated underwriting and claims settlement with the help of smart contracts, parametric insurance, high-value assets insurance, reinsurance, and medical claims processing.
• Companies incur huge losses because of the daily false claims and scams in the industry. A blockchain system is also hard to scale up because of the consensus-based validation procedures, the constant replications, and the ever-growing amount of data that is stored and can't be changed.
• Over the past ten years, technology has advanced rapidly and permeated every aspect of life. Technology is also familiar in the global vehicle insurance market. The revolutionary blockchain technology has changed the way that motor insurance operates. With blockchain technology, motor insurance businesses can now cryptographically encrypt all insurance-related data on a secure and reliable record-keeping platform. So automotive sales would drive blockchain technology in automotive insurance firms. For instance, according to Scotiabank, worldwide car sales grew to around 66.7 million automobiles last year, up from around 63.8 million units in 2020.

Insurers and their associations worldwide have indicated that most policyholders still need to acquire insurance coverage that will respond to the business interruption losses resulting from the COVID-19 pandemic business closures. But, during the pandemic, the vendors experienced a surge in demand in the blockchain market. Moreover, with the new plans adopted by many organizations, like digital business practices and the usage of emails on personal servers, and with the rapid surge in internet penetration and increased usage of mobile devices throughout the globe, people are becoming more inclined to adopt blockchain technology.

Blockchain in the Insurance Market Trends

Smart Contract is Expected to Hold a Significant Market Share

• Smart contracts powered by a blockchain could provide customers and insurers with the means to manage claims in a transparent, responsive, and irrefutable manner where claims handling could become more efficient and streamlined, resulting in an improved customer experience.
• Contracts and claims could be recorded on a blockchain and validated by the network, ensuring only valid claims are paid. Smart contracts would also enforce the claims, for instance, by triggering payments automatically only when certain conditions are met. Smart contracts, for example, can be programmed to accept telematics device feeds and automatically raise insurance claims and trigger pay-outs in the event of an accident.They can also recommend trusted service stations in the vicinity and call for medical assistance if necessary.
• Smart contracts possess the capabilities to automate several processes that otherwise require manual intervention. In addition, data's immutability increases reliability and helps make faster and more accurate decisions.

For instance, in November this year, ZetaChain (ZETA), a California-based public L1 blockchain and omnichannel smart contract platform, launched an enhanced testnet. This strong network upgrade includes support for cross-chain communications as well as Omnichain smart contracts. This is the public blockchain, where smart contracts may access and control assets, data, and liquidity on any chain.

Asia-Pacific is Expected to be the Fastest Growing Region

• Blockchain technology is getting a lot of attention in the financial sector, which includes banking, financial services, and insurance.
• As insurers are expected to increasingly leverage the growing application of IoT for data gathering across emerging economies, the blockchain-based implementation could greatly increase the overall process's efficiency and enable insurers to capture sensory information securely through a tamper-proof method. For instance, ICICI Lombard uses AI in healthcare insurance-related claims to identify fraud. Any transactions validated and stamped are hard to change and can be verified using AI for real-time settlement.

For instance, in May this year, the Blockchain-based Service Network (BSN) presented itself as a 'one-stop shop' for deploying blockchain applications in the cloud, which might otherwise be expensive and time-consuming. It intends to connect several blockchains to assist enterprises in deploying the technology.

Blockchain in the Insurance Market Competitor Analysis

The blockchain market in the insurance industry is highly concentrated and consolidated with a few significant players, such as IBM Corporation, Microsoft, AWS, Oracle, SAP, etc. Regarding market share, some of the major players currently dominate the market. However, with the advancement of blockchain technologies and cloud deployment, new players are increasing their market presence, thereby expanding their business footprint across emerging economies.

In May 2022, Superscript, a U.K. startup and Lloyd's of London insurance market broker, launched a dedicated product called 'Daylight' for crypto businesses. The Daylight Insurance offering for crypto firms begins with technology liability and cyber insurance, which protect against everything from ransomware attacks to unintentional copyright infringement.

In January 2022, the open-source, decentralized insurance protocol and ecosystem Etherisc launched a blockchain-backed insurance application that can autonomously issue policies and execute payouts for travel delays and cancellations. Payments are processed through the blockchain payments program Gnosis Chain (formerly xDai Chain), with an initial payment option of the U.S. dollar-backed USD Coin.

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• The market estimate (ME) sheet in Excel format
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