Insurance Regulatory Body, IPEC Believes Blockchain Would Help Increase Insurance Penetration In Zimbabwe

Alvine Chaparadza Avatar

The insurance regulatory body, Insurance and Pensions Commission (IPEC) is contemplating to bring in blockchain technology into the insurance sector as a way of increasing penetration by drawing an emerging batch of prospective customers who are tech-savvy.

The insurance industry like many other industries can benefit from blockchain technology as it can be used to facilitate claims handling in a more efficient manner which in turn will make insurance affordable. Lynn Mukonoweshuro, the boss of IPEC said;

We have been challenging all our businesses to say we have been failing to drive insurance penetration through traditional methods, so it only makes sense that we do it in a techno-savvy manner that appeals to the new generation…..We are very conscious of the relevance and the positive impact of blockchain technology. And we believe that for blockchain technology the time has come for us to embrace it as an insurance industry and take advantage of it to lower delivery of insurance to the population of Zimbabwe.

But blockchain can solve a bigger problem……Fraud

Blockchain will be good for the insurance sector because the industry is rife with fraud which includes fictitious car accident or death claims, exaggerated claims, backdating of insurance claims, contract alterations etc. Fraud claims are estimated to constitutes as much as 30 to 40 percent of the claims paid annually. IPEC estimates that a total of $165 million is paid out annually through fraudulent claims. 

Through blockchain, insurers would benefit from managing claims in a responsive and transparent way. It would start by recording and verifying contracts on the blockchain. When a claim is submitted, the blockchain could ensure that only valid claims are paid. Therefore moving insurance claims onto an immutable ledger, blockchain can help eliminate common sources of fraud in the insurance industry.

Another problem is that it takes too long for insurance applications and claims to be reviewed and processed. Here in Zimbabwe, it can take several weeks to settle an insurance claim. But implementing blockchain technology could create significant efficiencies in the insurance claims processes as insurers can simply verify data on blockchain to approve claim applications in real time.

And Remember

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5 comments

  1. lol

    And Remember
    ……………….

    Thats the main part of the story.. you couldnt wait.. LOL

    1. Robert

      @imimusadaro A fraudulent claim wont occur in blockchain because of the hashing algorithm used and the distributed nature of the nodes that will confirm the insurance claim.You will have to own > 50% of the network to forge transations.Thats why up to today not a single Bitcoin has been crafted from thin air.

  2. Imi Vanhu Musadaro

    These problems have nothing to do with the blockchain, and I don’t see how blockchain contributes to preventing them in any case. What differentiates a fraudulent claim on a blockchain based system from a non-fraudulent one? Data can be made immutable even without the blockchain. I think buzzwords are getting folks to make bad decisions. They just need to perform their due diligence.

    How can you quantify the amout of fradulent claims being paid out if you aren’t catching the culprits? It means they are just pulling figures from thin air to support a bad business decision.

  3. Robert

    Good news Zimbabwean companies is waking up to blockchain while RBZ is tyring to ban Bitcoin.

  4. Imi Vanhu Musadaro

    When you don’t understand a problem, you prescibe the wrong solutions. Fraudulent claims occur at the point of submission. If you fail to identify them then, there’s not much to be done later. Both the fraudulent and non-fraudulent claims are captured into the system, so both types of claims will be legitimate entries, be it in a blockchain or non-blockchain system. The claims are not forgeries as you have stated. Though the submitted documentation could have been forged, that has no bearing on whether the system is blockchain based.

    Yes, block chain would prevent forged transactions, but that is not the source of fraud in this instance rendering the point irrelevant.

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