Smart contracts help blockchain technology work. According to PwC, a smart contract is a digitally signed, computable agreement between two or more parties. A virtual third party, a software agent, can execute and enforce at least some of the terms of such agreements.2 The smart contract allows the information to be shared and executed in a secure manner.
Cost savings is a major benefit that blockchain can provide. It is logical to see that claims, administration, underwriting and product development can be impacted by the use of blockchain, and today, much of blockchain use cases have been focused on cost reduction efforts. Initial areas considered for insurance companies include using blockchain to build automation in paying claims.
The combination of the Internet of Things (IoT) and Artificial Intelligence (AI) will lead to automation of insurance processes that will make our industry look very different in the near future. However, these are still new technologies that require proper due diligence before being fully leveraged by the insurance industry.