Specialty Insurance that Uses Blockchain

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Contributor, Benzinga
Updated: September 23, 2021

Get the right amount of coverage you need to protect your valuables with Lemonade Home.

Insurance has long been annoying to buy and frustrating when it’s time to file a claim. Some companies are using insurtech and blockchain to improve every aspect of insurance, including buying policies and filing claims. Learn more about specialty insurers that use blockchain here.

Best Specialty Insurance Providers Using Insurtech to Disrupt the Insurance Industry

Insurance companies are making life, auto and homeowners insurance more accessible and affordable. They’re also introducing relatively new types of coverage like crypto and decentralized finance (DeFi) insurance. Learn more about the top insurance companies using insurtech

MetroMile
securely through MetroMile's website

Best for Pay-Per-Mile Auto Insurance: Metromile

Metromile takes a unique approach to car insurance, charging you per mile you drive rather than a flat rate. If you drive less, you pay less. According to Metromile, its customers save 47% on average on their auto insurance.

The digital insurance company charges a low monthly rate and then adds on a few cents per mile you drive. All miles over 250 per day are free. 

Best Specialty Insurance Platform: Insurwave

Specialty insurance offers unique challenges to insurers and buyers. It requires transferring a lot of information and takes a significant amount of time to administer. Insurwave has created a platform that has streamlined the insurance-buying process and improved transparency. It uses cloud and cryptography technology to make it easier to introduce new products and services and make them available. 

Best for Businesses: Core Specialty

Core Specialty uses technology to support its underwriting and insurance infrastructure. It prioritizes accountability and quick decision making. It offers a range of specialty insurance options, including professional liability, agriculture and marine insurance. 

Best Insurance Alternative: Nexus Mutual

Nexus Mutual’s goal is to take the insurance company out of insurance altogether. It uses blockchain technology to create a decentralized insurance platform that allows individuals to transact directly with each other. It also uses smart contracts, which are secure and easy to administer. It currently offers Smart Contract Cover with a fixed cover amount, which covers unintended code usage. 

Lemonade Home Insurance
Best For
  • Ratings, price and customization

Best for Homeowners Insurance: Lemonade

Lemonade applies insurtech to almost every aspect of its online insurance business. Applying for coverage is quick and easy. What’s especially impressive is its claims process. Claims are processed by artificial intelligence (AI), and many claims are paid in just a few minutes. In addition to homeowners insurance, Lemonade offers renters, pet and life insurance. It will be rolling out car insurance soon. 

It also offers a unique Giveback program. Once Lemonade pays its claims and covers its expenses, it donates any remaining funds to a charity you select. 

Root Insurance
Best For
  • Infrequent drivers
securely through Root Insurance's website

Best for Personalized Auto Insurance: Root Insurance

Root Insurance offers a test drive that could save you money on your auto insurance. To do the test drive, you download the Root Insurance app. The app runs in the background, collecting information on your driving habits. It looks at how you brake, whether you’re focused on your driving, how you turn and when you drive. 

Once the app has enough information, Root Insurance will let you know whether it can insure you and what your rate will be. 

Best for Peer-to-Peer Insurance: Teambrella

Teambrella groups its users into teams. Each team pools its money to pay for specific types of claims for other members. Team members approve or deny each claim. Right now, Teambrella offers pet and collision insurance. It’s available in a limited number of countries with plans to expand. 

What is Blockchain? 

Blockchain is a term used to describe various technologies. First, it refers to a distributed database, which is a database that’s stored in identical nodes around the world. Any changes made to 1 node need to be communicated to other nodes so they can change as well. 

It also refers to decentralized control. There’s no company or person that decides what changes are made to the blockchain. Instead, a majority of nodes has to approve any updates. This is one of the reasons blockchain is so secure; for an outside party to make changes, it must control 51% or more of the nodes. Cryptography adds anonymity to the process. 

How Is Blockchain Used in Insurance and Insurtech?

Insurance companies use blockchain in several ways. 

Smart Contracts

Smart contracts are programs that execute when predetermined criteria are met. They run automatically and without human error, which speeds up the insurance claims process and other aspects of insurance. 

Peer-to-Peer Insurance

Peer-to-peer (P2P) insurance allows a group of people to pool their funds and administer their own insurance. This simplifies the insurance process and lowers costs, as there isn’t an outside party like an insurance company involved. Funds often are kept in digital wallets, and smart contracts may be used to determine whether a claim should be paid. 

Advanced Automation

Administering insurance policies is a tedious process. Information is constantly flowing between insurers, 3rd parties like healthcare providers and the insured. Human error can bog down the process, leading to frustration. Advanced automation using digital ledgers like blockchain can reduce errors and improve communication, as information is stored in an unchangeable record. 

Enhanced Security

Insurance companies are entrusted with sensitive and private information, which makes them an appealing target for cybercriminals. Blockchain’s decentralized ledgers and encryption significantly increase security. 

What is Insurtech?

Blockchain is a specific type of insurtech. Learn more about insurtech and how it’s changing the insurance industry. 

Definition of Insurtech

InsurTech is a combination of the words insurance and technology. It refers to using technology in an innovative way. It often makes insurance more accessible and affordable. 

How Insurtech is Disrupting the Insurance Industry

  • Big Data makes rates more accurate and affordable.
  • Wearables allow insurance companies to offer more accurate rates and incentivize healthy habits like exercise.
  • Chatbots can often resolve customer issues quickly.
  • AI technology can help speed up the claims process.
  • Peers can insure each other rather than purchasing a policy and working through an insurance company.

Are you Taking Advantage of Insurtech?

Insurtech can simplify your life. It makes applying for insurance easier, and claims are paid faster. Curious about insurtech? Check out Benzinga’s insurance resources to learn more. 

Frequently Asked Questions

Q
What are some ways healthcare uses blockchain?
A

Healthcare providers and health insurance companies use blockchain in several ways. It can be used to secure sensitive patient information. It also can be used as a secure way to transmit that information to insurance companies so they can make informed decisions about claims. It also ensures healthcare items like pharmaceutical products can be traced back to their point of origin, which helps increase patient safety and accountability.

Q
How does blockchain keep my data and private information safe?
A

Blockchain keeps your data and private information safe through decentralization. Rather than having your information stored in one place, it’s stored in several identical nodes around the world. If one of those nodes changed, all the nodes must be changed, and a majority of the nodes must agree to the change in a process called governance. To force a change, a cybercriminal would need to control 51% or more of the nodes. Cryptography adds additional security and anonymity.

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