Blockchain in the automotive industry — insurance
While the financial sector has been using the blockchain for quite a few years now, car manufacturing businesses are only discovering new advantages of this technology. The auto industry is entering a new age of digitization that will significantly change everything we are used to with blockchain technology revolutionizing the automotive industry.
Insurance and blockchain
The blockchain can bring significant benefits to insurance companies, too. The technology’s immutability principle and proof of provenance concept will help businesses to leverage their operating activities effectively. If a car insurer receives fraudulent information via false claims or any other channel, smart contracts will help a company validate the submission. With the blockchain, insurers would be able to check, for example, if a car has undergone serious repairs before the accident, which may have been caused by a vehicle’s technical issues, or verify any other information provided by the person who submits the data necessary for insurance purposes.
Automated Insurance Claim Processing
Customer identity management online has always been an expensive and time consuming task. The user needs to register online for the service that may require additional steps like a face to face interaction — as it is often the case with financial institutions. The user must also authenticate their log in, proving that they are authorized to access that portal. It can soon become repetitive if the user has to go through the same steps with each new service provider. Furthermore, in addition to being repetitive, it also raises privacy concerns, since these service providers store huge amounts of identity information with them. Blockchain based identity management solution solves this problem by cutting out all the middlemen, i.e. the third parties. The user could register on the Blockchain and, as required, authorized parties can simply access that information on the network. This removes the need for the user to register with every new service provider. While best practices for this application are still under development, it has already shown an enormous potentials. Nonetheless, privacy still remains a concern as once information is stored on Blockchain, it is accessible to everyone in the network opening up new avenues for research.
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Other areas where insurance and blockchain technology can go hand in hand
- vehicle safety, data security — the more connected a vehicle is, the more susceptible it becomes to potentially fatal cyber attacks. Thanks to blockchain’s strong cryptographic roots that cannot be reverse-engineered. This is the perfect place to store data since it cannot be changed by an unauthorized person.
- telematics- in the connected car era, telematics includes software-based navigation, vehicle-to-vehicle (V2V) communications, and a range of other services that could affect vehicle safety and passenger security. Blockchain can be used to keep the data which was sent and received by the telematics systems safe. The advanced level of encryption prevents hackers from viewing or using this data.
- authentic service records — estimating the resale value of the vehicle and helping manufacturers validate the insurance claims rely largely on the service record of a vehicle. However, the service records can be forged, edited or manipulated by the customer or any third party to benefit credits that have not been deserved. A Blockchain based system will enable service events details to be stored in a shared ledger that all parties have access to. This transparency of information about a vehicle’s service history enables the second-hand buyer or the manufacturer to evaluate the vehicle more accurately. Furthermore, real wear and tear would help the auto finance provider to more accurately gauge the residual value of the vehicle as the lease approached its end of contract date.
The automotive industry has long been considered the engine of the world’s technological progress. Still, however, the sector is facing a number of challenges with promoting, selling, insuring, and recalling vehicles and their components. Blockchain technology is already proving that it can be an answer to the majority of these issues by providing car companies and their partners with a reliable and transparent tool to collect, store, manage, and use the car data in a more efficient manner.