Blockchain in Insurance Market

Global Blockchain in Insurance Market Forecast

• Global market for blockchain in insurance worth around US$0.6 Bn in 2022 all set for a leapfrog to US$9.6 Bn by 2030-end
• Blockchain in insurance market valuation to rise high at a monumental CAGR of 50.6% over 2023 - 2030

Quick Report Digest

1. The rise in fraudulent activities in the insurance industry and the expanding desire for transparent and secure transactions are both factors that have contributed to the blockchain's expansion in the market for insurance.
2. The insurance market's adoption of blockchain technology is anticipated to rise as insurance businesses invest more in cutting-edge encryption technologies to protect client and commercial data.
3. The insurance industry's use of blockchain technology is still developing from a regulatory perspective. It might be difficult for insurers to comply with current laws and adapt to new frameworks.
4. In 2022, the services category gained a sizeable revenue share in the blockchain in insurance industry. This is so that these firms may offer insurance while putting the requirements of the client first while also maximising revenue.
5. In 2022, the claims management segment dominated the industry. By automating the verification of claims, speeding up processing, and improving communication between insurers and policyholders, blockchain improves the claims management process.
6. In the blockchain in insurance market in 2022, the large enterprises category saw the highest revenue share. This is due to the automated and secure nature of blockchain technology. Large firms can profit from this powerful technology by automating contracts.
7. North America region is anticipated to account for the highest share of the global blockchain in insurance market. This is as a result of the fact that major North American retail banking service providers are using blockchain technology to help their customers and fight fraud.
8. The Asia Pacific will have the significant rate of growth in the blockchain in insurance market during the forecast period because large companies are investing more in the region to offer their services, and because rising economies in the Asia Pacific region are becoming more and more in need of online insurance solutions.

A Look Back and a Look Forward - Comparative Analysis

The rise in fraudulent insurance claims and the simplification of the intricate insurance processes are major market revenue drivers. Another important element that is anticipated to fuel demand for blockchain in insurance and promote market revenue growth is efficiency. These other significant factors are cost savings, transparency, quicker payouts, and fraud prevention. Smart contracts can also carry out a number of tasks without requiring human intervention, which significantly increases efficiency and is anticipated to continue driving market growth in the future.

Blockchain technology attracted more attention in the insurance sector between 2018 and 2022. Several use cases, such as policy issuance, claims processing, fraud detection, and reinsurance, were being investigated by insurers. The possibility for large efficiency improvements was another reason encouraging blockchain adoption in the insurance industry. Insurers sought to save administrative expenses and streamline operations by utilising blockchain for smart contracts and automated procedures.

Blockchain technology appears to have an encouraging future in the insurance industry. One can anticipate greater use and integration of blockchain solutions across different insurance processes as the technology develops and industry standards change. Blockchain has the potential to significantly improve security, transparency, and efficiency, making it a game-changing technology in the insurance industry.

Key Growth Determinants

• Increasing Use of Cutting-edge Software Platforms

The adoption of technology by the insurance sector has risen dramatically over time, fueling the expansion of the insurance sector. The adoption of technology by the insurance sector has risen dramatically over time, fueling the expansion of the insurance sector.

On the other side, chatbots are revolutionising the insurance industry by personalising consumer encounters with interfaces that resemble human beings. In addition, AR-based games and tutorials can be effective marketing tools for gathering customer insights and lowering training costs by improving the learning experience.

Moreover, chatbots and voicebots are made possible by conversational AI. As a result, the expansion of the blockchain in insurance is being driven by these insurance-related aspects.

• Increasing Amount of False Insurance Claims

The insurance industry is among those most vulnerable to fraud and data theft. Blockchain use in insurance is one of the cutting-edge strategies to reduce fraud, lessen risks, and increase client satisfaction. The number of fraudulent practices in the insurance sector is rising.

It thus provides a strong justification for implementing blockchain technology in its processes. In order to effectively prevent fraudulent claims, insurance companies must replace their outdated legacy systems that are incorporated into their insurance systems with modern ones.

A decentralised public ledger among numerous untrusted parties is another feature of blockchain technology. It can therefore be used to detect fraud and eliminate errors. As a result, blockchain technology enhances the effectiveness of fraud detection and prevention, and with the application of blockchain technology in insurance.

• Critically Rising Need for Safe and Secure Internet Platforms

The acceptance of safe online platforms is driving the growth of blockchain in the insurance industry, which is using digital technology more and more to streamline processes, increase client satisfaction, and enhance operations. As a result, the need for safe online platforms that provide consumers with a smooth and secure digital experience is rising.

The COVID-19 epidemic has also accelerated the shift to remote labour and remote access to services, such as insurance. As more people use insurance services online and work from home, there is an increasing need for safe online platforms that can provide consistent and secure access to data and services.

The insurance industry also has to abide by strict regulations on data security and privacy, since breaking these regulations can have disastrous consequences. As a result, there is an increased need for secure online platforms that meet these regulatory requirements.

Major Growth Barriers

• Lack of Knowledge About Blockchain Technology

The applications of blockchain technology are still in their infancy across several industry verticals. Even if the insurance sector has demonstrated a favourable trend in adopting technology, there is still more that needs to be done to raise awareness of the DLT and its many potential applications in the insurance sector.

One of the biggest problems is the lack of knowledge. Furthermore, the successful adoption of blockchain technology could help insurance companies handle their fraud, risk, compliance, and security concerns.

• Uncertainty About Regulatory Status, and Lack of Standardisation

Insurance industry utilisation of blockchain technology is continually changing. The current regulatory requirements are affected by these developments. However, because it is difficult for regulatory organisations to keep up with technical advances, this factor has an impact on how technology is used.

In light of these technical advancements, regulatory bodies must understand how the laws can impact the overall application of technology. As a result, the implementation of cryptocurrency transactions on blockchain technology in the insurance industry is hampered by unclear rules and a lack of common standards.

Key Trends and Opportunities to Look at

1. Rise in BaaS

Blockchain use is anticipated to grow incredibly faster, especially in the BFSI industry. It's expected that the technological advancement will give blockchain service providers hitherto unheard-of alternatives for tailoring and making available to such banks their solutions.

Because of the stupendous rise in demand for BaaS, some of the biggest names in IT have begun integrating BaaS modules into their cloud computing platforms. These insurance-related factors are therefore motivating the growth of the blockchain in insurance business.

2. Rising Preference for Secure Online Platforms

The rise of the blockchain in insurance is being driven by the adoption of secure online platforms, as the insurance industry is increasingly using digital technology to improve customer experience, speed up processes, and strengthen operations.

Consequently, there is an increasing need for safe online services that can give consumers easy access to the internet in a secure manner. The pandemic has also accelerated tendencies toward working from home and internet access to services, including insurance.

3. Growing Number of Insurtech Start-ups

Innovative insurtech enterprises that use blockchain technology are starting to emerge, opening doors for cooperation and joint ventures with conventional insurance providers. These alliances have the potential to stimulate innovation and market expansion.

The development of new insurance services and products is also made possible by blockchain. For instance, parametric insurance gives new options for risk coverage because claims are automatically generated based on predetermined events that are recorded on the blockchain.

How Does the Regulatory Scenario Shape this Industry?

The regulatory environment has a significant impact on how blockchain technology is adopted and developed in the insurance sector. Insurance firms frequently must adhere to strict compliance standards set by regulatory bodies, which may include data security, privacy, and transparency obligations. By offering a tamper-proof and auditable record of transactions and data, blockchain technology can assist insurers in meeting these standards.

In addition, strict data protection rules are included in laws like the California Consumer Privacy Act (CCPA), and the General Data Protection Regulation (GDPR) of the European Union. Insurers can manage consumer data more securely since blockchain's capacity to encrypt data and limit access to it complies with these criteria.

Fairfield’s Ranking Board

Top Segments

1. Demand for Services Remains the Highest

The blockchain in insurance market saw a significant increase in the service category revenue share in 2022. This enables these businesses to provide insurance while prioritising the needs of the customer and increasing income.

Blockchain technology has a lot to offer insurance providers because it makes a number of essential activities easier, such gathering data on insured individuals.

The solution category is expected to grow significantly over the forecast period. This is explained by the potential of blockchain technology to change and streamline the insurance sector and effectively free it from archaic practices.

The reluctant but strong interest in blockchain in insurance solution developments is being driven by a rise in consumer mistrust of centralised financial institutions, which results in high underinsurance rates.

2. Claims Management Category Presents the Largest Application Area

In 2022, the claims management category dominated the market, and it is predicted to grow significantly over the course of the forecast period because claims management software improves the claims process's efficiency, security on the blockchain, and transparency.

These programs make use of blockchain's immutable properties to safeguard data integrity, reduce the likelihood of fraud, and enable real-time tracking and claim verification. These cutting-edge capabilities significantly increase the accuracy, responsiveness, and dependability of managing insurance claims, enhancing client happiness and enhancing operational efficiency for insurance businesses.

During the forecasted years, the payment category is anticipated to grow at a significant rate. Blockchain payments in the insurance sector help to lower risks while also improving the speed and transparency of payment procedures. Banco Masventas (Argentina), MUFG, and Taipei Fubon Commercial Bank are just a few of the international institutions creating blockchain-based payment networks.

Moreover, a study by Accenture found that 90% of banks in North America are using blockchain technology for payment applications, illustrating the technology's explosive growth.

3. Large Enterprises Take the Lead in Adoption

The large enterprise category held the majority of the market share because large-scale businesses have better infrastructure and financial resources, which enables them to invest in and employ blockchain technology more successfully. They can use blockchain technology to streamline insurance processe including claims processing, underwriting, and policy administration.

In addition, this kind of payment contract can be carried out without a human being getting involved thanks to the use of smart contracts on blockchain technology. With the contract's automation, this powerful technology can help large organisations.

Furthermore, the small and medium-sized enterprises category is expected to expand significantly. Small and medium-sized businesses (SMEs) are crucial to the insurance industry's use of blockchain technology. Blockchain can support SMEs by streamlining operations, lowering administrative expenses, and automating procedures. By doing this, SMEs may be able to manage policies, claims, and client data more affordably.

Blockchain can be used by SMEs to improve fraud prevention and detection. Blockchain can assist SME insurers in more efficiently identifying and mitigating fraudulent claims by establishing a transparent and immutable ledger.

Regional Frontrunners

North America Jumps in the Bandwagon

The region with the biggest market share for blockchain in insurance is expected to be North America during that forecast period. The region's growing investment in blockchain technology and the quick development of management solutions to enable data confidentiality, prevent cyberattacks, and ensure data security and privacy are largely responsible for the region's revenue growth.

A bigger demand is also created in this area by the introduction of cutting-edge and creative technology features. A focus on blockchain technology is also being made in the financial industry, which includes banking, financial services, and insurance. For instance, the majority of the banks in North America are making investments in blockchain technology, including JPMorgan, the Royal Bank of Canada, and Bank of America.

Market Awaits Notable Grwth in Asia Pacific

The market for blockchain in insurance is expanding at the fastest rate in Asia Pacific, which presents a significant opportunity for the industry. The primary reasons propelling the Asia Pacific market growth include the rise in disposable income, acceptance of internet services, and implementation of blockchain technology by enterprises.

Growth of market in Asia Pacific is further aided by the insurance sector's unrivaled opportunity to experiment with low-cost, creative, and open regulatory systems built on blockchain technology.

Additionally, the expansion is the result of technology developments like cloud computing, big data analysis, IoT device integration, and cyber security risks, which have raised awareness of these technologies among the region's insurance businesses.

Fairfield’s Competitive Landscape Analysis

Both established businesses and start-ups are vying for market share in the fiercely competitive blockchain in insurance sector. Leading market participants provide blockchain solutions for the insurance sector, including smart contracts, claims processing, identity verification, and fraud detection.

Who are the Leaders in Global Blockchain in Insurance Space?

• Applied Blockchain
• Accenture plc
• Auxesis Group
• Algorythmix
• Bitfury
• IBM
• SAP SE
• Oracle Corporation
• MetLife, Inc.
• Consensys
• RecordsKeeper
• Amazon Web Services, Inc.
• Symbiont
• Xceedance
• Microsoft

Recent Company Developments

New Product Launches

• September 2022: The first marine platform powered by blockchain is called Insurwave, and it is presented by EY and Guardtime. This platform unifies and encrypts the streams of many data sources used in shipping insurance around the globe.
• September 2022: Addenda is a blockchain-based digital platform developed by the Dubai-based XA Group that enables insurers to reconcile vehicle recovery receivables. The platform is available to all automobile insurers in the Middle East and North Africa (MENA) area without charge.
• May 2022: A specific product dubbed "Daylight" was introduced for cryptocurrency firms by Superscript, a UK start-up and broker on the Lloyd's of London insurance market. The Daylight Insurance package for crypto companies starts with cyber insurance and technological liability coverage, which give protection against everything from unintentional copyright infringement to ransomware attacks.
• January 2022: A decentralised, open-source insurance protocol and ecosystem A blockchain-based insurance program that can automatically issue policies and carry out payouts for travel delays and cancellations was been released by Etherisc. Payments are handled through the blockchain payment system Gnosis Chain (formerly xDai Chain), with the USD Coin, which is pegged to the dollar, serving as the initial payment option.

Partnership

• March 2018: With the goal of providing blockchain solutions that can run on AWS, Luxoft Holding, a technology consulting company, teamed with AWS. The Hyperledger Fabric network was used to construct a digital ledger solution by Luxoft Holding.

An Expert’s Eye

Demand and Future Growth

In recent years, the blockchain in insurance industry has grown quickly. The use of blockchain technology in the insurance industry accelerates procedures including underwriting, claims management, and policy administration. The major market insights, market dynamics, and industry drivers that influence the blockchain in insurance business are highlighted in this executive brief.

Supply Side of the Market

According to our analysis, in the insurance sector, the adoption of blockchain was heavily influenced by the US. Numerous insurtech and insurance companies in the US were actively investigating and deploying blockchain solutions. America is renowned for having a thriving ecosystem for technology and innovation. The US was home to numerous blockchain start-ups and insurtech companies, which specialised in solutions for the insurance industry.

Additionally, the US has one of the largest insurance markets in the world, which makes it a desirable region for blockchain adoption. The potential of blockchain to improve numerous parts of the insurance sector was being aggressively explored by both existing insurance companies and start-ups.

Global Blockchain in Insurance Market is Segmented as Below:

By Component

• Solution 
• Service

By Application

• GRC Management
• Claims Management
• Identity Management and Fraud Detection
• Payments
• Others

By Enterprise Size

• Large Enterprises 
• Small and Medium-sized Enterprises

By Geographic Coverage:

• North America 
  • U.S. 
  • Canada 
• Europe 
  • Germany
  • U.K.
  • France
  • Italy
  • Turkey
  • Russia
  • Rest of Europe 
• Asia Pacific 
  • China
  • Japan
  • South Korea
  • India
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America 
  • Brazil 
  • Mexico 
  • Argentina
  • Rest of Latin America 
• Middle East & Africa  
  • GCC 
  • South Africa
  • Egypt
  • Nigeria
  • Rest of Middle East & Africa