India’s health insurance ecosystem is vast and chaotic. It consists of multiple stakeholders - insurance companies, provider hospitals, beneficiaries, third-party administrators, government regulators, and many other intermediaries.
These parties often interact with each other through a complex interdependent network that is largely paper-intensive.
Though technology has helped digitalize the ecosystem to some extent, the communication between the stakeholders is still disrupted by the piecemeal flow of information.
The sector needs a transparent record of data and a seamless flow of information that standardizes the operating procedure while also enhancing customer experience.
This is where blockchain technology can immensely benefit the health insurance sector. It can transform the way stakeholders interact with each other by maintaining records transparently and executing transactions through a participatory approach. The result is increased trust, reduced cost, and an improved bottom line.
But what exactly is blockchain technology, and how can it assist in this endeavor? Let’s find out.
What is Blockchain, and How Does it Work?
Blockchain is a distributed ledger system that stores information electronically in a digital format. The information and transactions recorded here are duplicated and spread across the entire network of computer systems on the blockchain.
Blockchain records information in groups known as blocks that are strung together. Each block has a specific storage capacity. Once the capacity is filled, the block is closed and chained to the previous block, thus creating a chronological record of data.
The records in the block are immutable, i.e., impossible to change, hack or tamper with, ensuring the security of data.
Here is how blockchain differs from a typical database:
Blockchains record data in blocks that are linked together to create an irreversible time chain of transactions
Blockchains are decentralized where all network users collectively control data, and no single person can alter it.
Blockchains are distributed, which facilitates easy sharing of data. All participants of the blockchain network have access to the ledger to ensure complete decentralization.
Blockchains are secure. Once the data are entered, they cannot be altered or deleted without the consensus of all participants. This provides a permanent data record for all the network participants.
Due to these features, blockchain is an ideal solution to revamp the health insurance sector, where multiple stakeholders need to continually share, update and verify data in a time-bound manner.
Blockchain Use Cases in Health Insurance
Below are some use cases of blockchain in health insurance that highlight how they can directly or indirectly improve their operations and interaction with other stakeholders resulting in enhanced product value and higher customer satisfaction:
Interoperable and Comprehensive Health Records
The health insurance sector relies on continuous data flow regarding the patient, victim, or family from one stakeholder to another.
However, due to multiple intermediaries involved in the health insurance lifecycle, information sharing takes a painfully long time. Such inefficiencies can be rooted out of the sector by using blockchain technology.
Blockchain not only provides a permanent record of all transactions between stakeholders but also offers a level of transparency that is currently lacking in the sector. Each participant can load information that is relevant and authorized to them from the shared database.
Further, they can also view the transaction's status, process, and history within the limit of their authorization. This helps solve the interoperability problem not fully addressed by the technologies currently in use.
Insurance Management through Smart Contracts
Smart contracts play a crucial role in making blockchain technology successful for the health industry. These are digital contracts coded on blockchain that self-execute when pre-determined conditions are fulfilled. Such contracts are transparent, traceable, and irreversible.
Smart contract technology can help insurers reduce their administrative cost through automation. For instance, they can leverage the technology for making automated claims payments in response to pre-determined events or information fed into the technology.
This will accelerate the claim payment process as opposed to the current cumbersome process in the health insurance industry. Most importantly, it will enhance user experience and instill higher confidence in insurance products.
Fraud Detection and Agent Rating
According to Indiaforensic Research, insurance companies in India lose around 8.5% of their revenue to fraud.
The complexity of the insurance industry, the paperwork-driven process, and the lack of transparency are the major factors to blame. Fraudsters exploiting these gaps to make multiple claims from different insurers are not unheard of.
Insurers can counter this by using blockchain technology for better coordination between insurers. For example, the claim information on a shared ledger eliminates any double booking or processing multiple processing for the same incident.
Further, the technology also helps establish proper ownership through the digital certificate to reduce counterfeiting attempts.
Improving Provider Directory Accuracy
Maintaining an up-to-date directory is vital for insurance companies. It is not only critical to the reimbursement process but also safeguards patients from being duped by unqualified professionals.
Blockchain can cut down the cost and burden associated with maintaining a directory by creating a single, accurate, shared data repository that can benefit all stakeholders.
Simplifying Insurance Application
For most patients, the most discouraging part of health insurance is the cumbersome application procedure. The form itself is complex, with too many technical and sometimes even intrusive questioning and documentation requirements.
Blockchain can help simplify the process by providing comprehensive and easy-to-access medical records on its platform. This could make the application procedure more comfortable and client-centric.
Facilitating Dynamic Insurer-Client Relationships
Like all businesses, customer centricity is vital for the growth of the health insurance sector, and blockchain can play a key role in this.
With its immutable database and smart contracts, blockchain fosters an interactive and value-added insurer-client relationship that may encourage more individuals to buy health coverage.
Further, the interoperability-enabled loyal programs executed by blockchain technology can take customer satisfaction and rewards to another level.
The health insurance sector in India presents immense growth opportunities. Harnessing blockchain technology can bring unprecedented transparency, efficacy, and accountability to the industry.
Therefore, the government and all stakeholders should come together and encourage the use of blockchain technology to revamp the health insurance industry.
However, long-term strategic planning and resource commitment is required to realize the full potential of the technology in the health insurance sector.
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