The test of Blockchain-based insurance products within the Italian market ended successfully, and can meet the increasingly complex and varied needs of the market.
The aim of the experiment was to test the possibility of creating smart and instant policies within the Insurance Blockchain Sandbox, a meticulous regimen environment that allows to try insurance goods and services based on the disruptive tech.
Under the supervision of a Scientific Committee composed of Institute for Insurance Supervision (IVASS), CeTIF Catholic University and Reply, the project involved four insurance firms, 3 banking institutions including Banca Mediolanum, Popular Bank of Sondrio and UBI Bank, and Aon Benfield Italia S.p.A. employed for the placement of rules to the public from the second quarter of 2020.
Among the various challenges facing the evolution of digitalization, instant insurance is an interesting topic to experiment with new ways of selling indemnity goods and a new user experience for the customer.
The successful experience in some blockchain-friendly banks, has allowed to issue indemnity goods parameters with guaranteed and automatic reimbursement, built on Smart Contract and to manage the life cycle of the policy in a more efficient and transparent way, thanks to distributed ledger technology that allows the perfect alignment between the different actors (Company, Bank, Customer, etc.).
Blockchain, distributed ledger tech and Smart Contracts ensured the confidentiality of information and the automatic execution of contracts in the event of a claim, allowing the development of the process of formulating and managing policies, with an immediate and certain settlement of the mutilation to policyholders.
Three forms of travel-related rules were tested, which include: coverage of the risk of poor meteorological conditions; flight delay; and loss of baggage.
The simplicity of the product and the guarantees offered by the technology used have suggested in the process of experimentation possible revisions of the documentation proposed to the customer, to meet the needs of greater clarity and simplification.
Due to blockchain and digitization, there has been an improvement in the customer experience with the minimum subscription time of only 6 minutes, which has led to a high level of customer satisfaction with the platform and the goods offered. For most of the insurance companies, a 60% reduction in operating costs in the opening and liquidation phase compared to a similar traditional indemnity product.