The cryptocurrency world is in tumult, but there has been serious discussion within the financial and security sectors regarding the technology that powers the volatile currency. While no one is suggesting that you invest in crypto, a deeper look at the code that powers it can transform captive insurance technology.
Cryptocurrency was able to reach mainstream appeal based on blockchain, also known as open digital ledger technology. This ledger records every single transaction that takes place for every single bit of crypto. To put this another way, blockchain technology records millions of transactions daily in an encrypted open ledger. Once a user has access to the coin, they have access to the ledger. Information is transparent across parties.
Security and Digital Transformation
Insurance software companies have accomplished a great deal when it comes to keeping client records secure. Single platform technology allows real-time transmission of data within a secure platform. Encryption standards are maintained throughout an organization thanks to cloud updates and automation. These benefits have factored into the massive move towards digital transformation throughout the insurance industry.
Captive insurers have benefitted from digital transformation and single platform technologies. Managing third-party portfolios within secure communication channels has been a cost-efficient way to ensure client privacy. Maintaining regulatory guidelines across geographies is now simpler. But even digital transformation has its drawbacks. Legacy data can be compromised during a transition and security measures may prove ineffective. Though necessary, data migration is hardly low-risk. Blockchain promises a better solution.
Security and Blockchain
Cryptocurrencies are nuggets of information that are transmitted digitally between parties via an exchange. Blockchain technology encrypts the information, creating a secure package that is tracked as it moves between parties via an open ledger. You can think of it as data migration in real-time. Individuals who have access to the ledger know exactly where the information is, where it has been and which parties have interacted with it.
A captive insurer can use blockchain technology to record every claim, cash transfer, renewal, risk assessment and other transaction within the policy itself. An entire history is encapsulated in one secure package that lives in a secure cloud.
Operations and Blockchain
The captive insurance ecosystem is complex. Agencies must navigate the needs of insureds, fronting agencies, investors and regulatory guidelines that are increasingly global in scope. But with blockchain, a policy’s history is in one secure place and its current status is updated in real-time by those who have authorized access. This improves underwriting efficiency and speeds claim resolution.
Captives need to know that blockchain could one-day be insuretech’s next stage of development because of its promise to deliver secure and expedient information management.