Market Trends of Blockchain Insurance Industry
The On-Premises Segment is Anticipated to Witness Increasing Market Growth
- An on-premise blockchain solution provides businesses with enhanced control over data. These solutions also offer significantly better threat protection as compared to cloud deployments. The availability of necessary expertise among staff and sufficient provision of resources are necessities for deploying on-premise solutions. On-premise web and email security solutions are expected to play a significant role in an enterprise's security infrastructure, owing to the benefits of managing and protecting on-premise assets and security.
- These deployments, structured in annual or multi-layer plans, eliminate the need for monthly expenses. Furthermore, they can be highly customized to an individual organization's processes and regulatory requirements. Cloud solutions, which are being increasingly adopted, still face the challenge of protection concerns, and hence, on-premise solutions will play a significant role in the market.
- Setting up an on-premise system is comparatively expensive, requiring significant upfront investments in product licenses, equipment, and IT services. Cloud-based technologies are, in comparison, extremely flexible and cost-effective for organizations and enable them to avoid spending much on hardware and software, as well as on human resources, to manage both.
- Cloud services are going to become increasingly secure, so that companies will be able to respond more quickly to security threats, focus on mitigating business risks, comply with regulatory requirements and save infrastructure investments. For multiple large enterprises with highly regulated IT infrastructure, the decision has been clear about housing their software and services on-premise. The solutions deployed on these in-house servers are also more accessible and under the company's direct control, which provides reliability compared to cloud servers.
- The growth in the insurance industry in the recent years is anticipated to boost the growth of the on-premise deployment of the blockchain market for the insurance industry.
- For instance, according to IBEF, India's insurance industry is one of the premium industries witnessing upward growth. The insurance industry's growth is attributed to increasing incomes and rising awareness of the industry. India is the one of the 5th largest life insurance market in the global emerging insurance markets, growing at a CAGR of approximately 32-34% annually. Further, the government of India allows Foreign Direct Investment in the industry under the automatic method of up to 26%.
- Further, the Insurance Regulatory and Development Authority India (IRDA) is progressive, vigilant, and determined to achieve its mission of 'Insurance for all by 2047', with aggressive plans to address the industry's challenges.
- Also, according to IRDA, the number of registered public insurers across India increased from 1 insurer in at the end of FY2022, there were 67 insurers operating in India. Of these, 24 were life insurers, 26 were general insurers, and five were standalone health insurers. Additionally, the country also had 12 reinsurers, including foreign reinsurer branches.
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North America is Anticipated to Hold the Largest Market Share
- The insurance industry is involved in various activities, including sharing data that is modified or updated by multiple parties. As a result, blockchain technology can benefit the insurance sector. North Americans, as early technological adaptors, are having significant adoption of blockchain in the insurance industry.
- Smart contracts allow blockchain users to transfer anything of value transparently without the intervention of a middleman. Smart contracts, like physical contracts, define the rules between two parties. Smart contracts, unlike traditional contracts, can track insurance claims and hold both parties accountable.
- Because of the multiple benefits of blockchain technology, the financial industry, which includes banking, financial services, and insurance, is focused on it. For example, the United States' major banks investing in blockchain technology, including JPMorgan and Bank of America.
- Although blockchain technology is a natural application, given the extensive insurance regulation in the United States, travel insurance solutions delivered through blockchain are probably still a few years away. However, other insurers in the United States currently offer the same kind of insurance as FlightDelay does, albeit without a blockchain component. Consumers don't actually need a claims adjuster to evaluate anything, look at a receipt, or anything of the sort because "parametric insurance," which is defined as "some parameter is broken and its automatic payout," will take care of that. For Example, Allianz introduced SmartBenefits, a pro-active payment mechanism for baggage and airline delays.
- However, the increasing number of frauds and data thefts in the region would hamper the growth of the studied market. For instance, according to Identity Theft Resource Center, in the year 2022, the number of data compromises in the United States stood at approximately 1802 cases. Meanwhile, more than In the same year, there were data compromises affecting 422 million individuals including leakages, breaches and exposure. In the United States in 2020, there were approximately 1 108 cases of data compromise.
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