Sompo Japan Insurance announced it is testing blockchain technology for automating claims on its Mobility-as-a-Service (MaaS) train delay insurance. The insurer is collaborating with SOMPO Holdings, mapping firm Navitime, and tech blockchain startup LayerX.
SOMPO views the experiment as part of Mobility as a Service (MaaS). We thought this was an auto insurance claim test, but the initial trial is for train delays. For 30 days starting tomorrow, if the departure time of a train on three lines is delayed, a payment will automatically be made to the customer with a digital coupon.
This experiment is part of SOMPO’s MaaS program. For 30 days, if a train on one of three lines is delayed, insurance payouts will be automatically made to clients using a digital token.
“In order to respond flexibly to changes, we will create new valuable customer experiences and create valuable products and services through co-creation with various partners and the use of cutting-edge digital technology,” said Satoshi Ando, Deputy General Manager, Deputy General Manager at SOMPO Japan.
Flight delay insurance apps are more common, and AXA ran a blockchain trial, which it subsequently withdrew.
While blockchain applications for delay insurance are relatively common, they have not always succeeded. For instance, France’s AXA tested blockchain technology for its services but ultimately decided against implementation.
Japan’s insurance sector ranks among the largest in the world. Six Japanese insurers are featured among the top 25 globally, ranked by revenue and assets.
Other Japanese insurers are also exploring blockchain. Tokio Marine stands out as a successful example, having invested in the B3i blockchain consortium with 19 other global insurers.
It conducted a trial with NTT Data for blockchain-based transactions in marine and cargo insurance.
A month ago, insurer Daido Life announced testing a corporate digital currency concept. The currency would serve as a reward to incentivize clients to stay healthy.
Blockchain continues to be a hot topic in the business world and news, according to Beinsure’s report How Blockchain Can Help the Insurance Industry. Many people have heard of blockchain but may not be familiar with what it actually is. As a basic definition, blockchain is a data structure that enables the creation of a digital ledger of transactions and the ability to share them among a distributed network of computers.
The challenge of data authenticity and data controls in the insurance industry continues to grow at a time when regulators are increasing data security requirements.
Regulators do not consistently request data from insurance carriers across all states and may be looking at incorrect, incomplete or outdated data. Carriers only share minimal information because they do not trust that their data is going to stay secure and private, or how it is going to be used once it leaves their data center.
The core benefit of blockchain is that it builds trust between parties sharing information. The information shared is encrypted as an electronic list of records or blocks.
It cannot be erased, which helps to ensure trust between users. Once information is recorded, it cannot be changed without changing all of the records, which also provides for secure transactions between users. We’ve observed how this would be valuable to the life insurance industry, as it helps to ensure information is accurate, secure and trusted.
Blockchain can solve a myriad of insurance challenges
There are several ways that the blockchain can add value to insurance, allowing for the following services to become available, or more efficient:
- Smart contracts for insurance policies and faster claim processing;
- Payment verification—which will enable financial transactions such as claims collections or pay-outs to be faster, more accurate and auditable;
- Compliance—enabling insurers to reduce regulatory oversights and the associated costs.
Due to the transparent nature of blockchain in insurance, its application resolves many of the challenges arising from insurance policies; such as obtaining client consent or approval, and cooperation to collectively invest funds in shared resources and infrastructures. All information about a policy is recorded accurately and in real-time.
This includes dates, times, participants, locations, and values of every single transaction. Because blockchain distributes consent, this information is protected from any unwanted or illegal adjustment and tampering, making it safer than any preceding technology to date.
Looking at the market trends, the main challenge many insurance companies exploring blockchain technologies is the complexities required to make such a change.
