Empowering Insurance with Blockchain

By Yogesh Singh , Strategic Alliances & Regional Head India, Nihilent

Insurance as a vertical is highly compliance-driven and innovative technology solutions bring in a high degree of operational efficiencies. Nihilent has been one of the early adopters of Blockchain technology, and we have actively engaged with customers across the globe to identify the right use cases for business problems that can be solved using the Blockchain platform. Our solutions like- Proxy voting, Smart insurance, No Claim Bonus (NCB) are well known among banking and insurance professionals.

THE BIG PICTURE

According to a report in Business Today magazine, in 2019 alone, frauds burnt a Rs 45,000-crore hole in the Indian insurance industry’s pocket. Insurance frauds can happen at different levels, let me summarize the major ones:

• Internal Frauds: Back door involvement in claims, intentional illegal use of funds, fake signatures to withdraw funds, underwriting bad risk insurance willingly.
• Intermediary Frauds: Risk due to nondisclosure or misrepresentation, insuring already damaged risks, insuring non-existing policyholders for commission greed, false reporting and assessment, and untrue investigations.
• Dealers/ Workshops/ Tie-up frauds: Staged/ fake claims, exaggerating of damages, parts interchanging, charging high labor cost, altering of bills/ invoices, scrap/ salvage benefits.
• Customer Fraud: Increasing the Insured Declared Value (IDV) during insuring vehicles, fake or staged accidents, changing the driving license, making changes to cause, nature, and place of loss, changing date and time of loss, exaggerating loss and damages, multiple damages and accidents, delegating the lagging of claims resolution, purposely delaying of claim to get NCB discounts on premiums, arranging false FIR/ police reports by giving false information to authorities.

Clearly, a proactive technology platform is a must for addressing the various challenges insurance companies face when it comes to processing claims. Let’s here look specifically at the ‘No Claim Bonus (NCB)’ process and the inherent problems and solutions.

A PLATFORM FOR BUILDING TRUST AND TRANSPARENCY FOR GICs

It is in this context, Nihilent has developed the NCB solution by way of a private, permissioned NCB Insurance Chain by using Azure Cloud and Hyperledger Fabric. An API interface is built exposing ‘Claim Data Recording’ and ‘ Claim Status Query’ functionalities. Every participating GIC has its node in its Azure subscription. Every time a customer makes a claim, a record is added to the NCB Insurance Chain – enabling instant access by all other participants for use. In this scenario when a customer switches GIC, the new GIC can instantly check the last policy claim status of the customer and accordingly applies (or not) the NCB and issues the policy.

The current solution is an attempt to build the base technology platform and address the customer fraud category and specifically the NCB discount use case. The solution facilitates the following benefits:

• Real-time access to claims data.
• Reduced operational inefficiencies and overhead costs.
• Enhanced customer experience.
• No dependence on the Insurance Information Bureau (IIB) as there is no intermediary for this use case and Insurance Regulatory and Development Authority (IRDA) can have a node for monitoring/ governance in the existing insurance chain.
• The “NCB Recovery Process” is totally eliminated.
• Financial books can immediately realize the premium paid without having to wait for checking with the IIB database (takes up to 30 days).

There are currently 7 GICs in this consortium and Nihilent is the technology partner. We have successfully rolled out the first use case into production and are now in process of identifying the next set of use cases. Our solution simplifies the overall NCB process by ushering in a range of operational efficiencies.