The solution will help insurers reduce the risk of data breaches, fraud and money-laundering, while delivering a superior experience to customers through improved process efficiency, better record-keeping, and accelerated turnaround time.
The solution, developed late last year as part of a collaborative blockchain program is among the consortium’s first distributed ledger initiatives. In addition to ensuring real-time availability, transparency and consistency of records that can be audited at any time with easy traceability, storing data on blockchain will enable participating insurers to reduce operating costs, avoid duplication of procedures, and streamline approvals.
PwC’s Global Fintech Report 2017 expects 77 per cent of financial technology institutions to adopt blockchain as a process by 2020, with payments, fund transfer and digital identity management being the top areas of usage. The banking sector is working on a similar digital ledger solution called BankChain led by State Bank of India.
“As a shared source of truth, blockchain opens numerous possibilities for insurers to collaborate more effectively and transparently, make better-informed decisions, and create greater trust and accountability, while disintermediating data aggregators,” said Arun Baid, Global Delivery Head for Insurance, Cognizant.
Built on Corda, a distributed ledger platform developed by R3 and hosted on Microsoft’s Azure infrastructure, the solution will help insurers reduce their reliance on data intermediaries and aggregators in obtaining customer and policy details for a wide range of critical purposes, such as know-your-customer due diligence, financial and medical underwriting, risk assessment, fraud detection, and regulatory compliance.
The consortium comprises SBI Life Insurance, Max Life Insurance, Canara HSBC OBC Life Insurance, Edelweiss Tokio Life, IDBI Federal Life Insurance, Birla Sun Life Insurance, HDFC Life, Kotak Life, Tata AIA Life, PNB MetLife, IndiaFirst Life Insurance, ICICI Prudential Life Insurance, Bharti AXA, Aegon Life, and SUD (Star Union Dai-ichi) Life Insurance.
Insurance experts have noted that the efficiency introduced by blockchain can reduce document processing expenses by 15 to 25 per cent thus leading to billions worth of savings across the industry.