Blockchain For Insurance

Use Cases And Applications

BHUSHAN NAVGIRE
CAD/CAM AND ROBOTICS
INTRODUCTION

• Insurance is one of the sectors, that can gain from the use of blockchain
technology.

• Insurance has always been a big task for anyone going through a problem, and we
hope that blockchain insurance can change the whole landscape. Many blockchain
insurance start-ups are working towards a better insurance experience for the end-
user and the businesses that handle the insurance for people.

• Also, to get a better grasp of the blockchain insurance policy, we need to be going
through the blockchain insurance use cases. By going through these blockchain
insurance use cases, we will get a better idea of how blockchain insurance start-
ups are trying to solve the problem of the blockchain insurance industry.
 Current Conditions and How Blockchain Can Help :

• The prevalence of insurance in our life is nothing new. It has been running for
thousands of years. Right now, we are living in an insurance industry that depends
heavily on brokers. It is common for brokers to call up people and convince them
to take up a policy.

• The approach is to make a paper contract which means the inclusion of human
errors during the draft or when claiming the insurance. All-in-all, it all makes
things complex for all the parties in the pipeline including the insurers, brokers,
and consumers. We also need to take into consideration the risk associated with
the whole process.
How Blockchain Can Benefit the Insurance sector?

• Blockchain technology is the technology that can transform the industry.

However, it is not as impactful right now, but it does show promise. To get a better
understanding, we first need to understand how blockchain impacts or changes in
the insurance industry

• Also, we need to know which use-cases will have a significant impact in the long
run. For insurance companies, blockchain insurance is the newest term that they
need to deal with. It will give rise to blockchain insurance companies which will
make the most of what blockchain has to offer.
The four blockchain use-cases and applications include the
following:-

 Fraud Detection and Risk Prevention

 Claims Prevention and Management

 Health Insurance

 Reinsurance

 Property and Casualty(P&C) Insurance

To understand the potential outcomes, let’s go through the blockchain insurance applications and
use-cases below.
Fraud Detection and Risk Prevention: Current Issues and Problems

• Frauds in insurance are a big problem which both the organizations and the end-
users want to be solved

• Even with all the precautions and use of anti-fraud technology, insurers still have
to suffer from a large number of frauds. According to reports, the insurance
industry suffers from 80$ billion per year. Both the insurance companies and the
end-users suffer due to fraud. On average, a family can lose anywhere from $400
to $700 per year.

• In short, the standard method fails to prevent fraud considering the sheer
complexity that the insurance industry offers. Most of the time, a visibility issue
occurs when information is sent between peers including the insurers, reinsurers,
and claimers. The paperwork also enables criminals or fraudsters to modify the
information and hence make frauds
How Can Blockchain Help with Fraud Detection and Risk Prevention?

• Blockchain can solve the fraud problem thanks to the transparency it has to offer. Better
coordination between insurers means that fraud can be combated properly. The distributed ledger
technology ensures that the transactions done on the blockchain are permanent.

• The aim is to build a fraud detection platform that can work network-wide by also keeping privacy
in check. Blockchain lets insurers do just that. It lets stop fraud and bring more coordination
among insurers which can benefit indefinitely.

• So, what frauds can be stopped using blockchain? Let’s list them below.

1. Stopping or reducing counterfeit is the number one benefit with the help of digital certificates.
2. Double spending or booking can be eliminated where clients cannot claim for the accident twice.
3. Removing unregistered sellers and reducing the premium.
Claims Prevention and Management: Current Issues and Problems

• Keeping frauds aside, another big issue that the insurance industry suffers from
claims prevention and management. It takes time for insurers to gather all the
required information while verifying or settling an insurance claim. This can lead
to problems considering the severity of the claim.

• Another challenge is to find out the right fullness of the claims. It is common for
claimants to forge false documents which can lead to claims that never happened.
How Can Blockchain Help with Claims Prevention and Management?

• Blockchain, when combined with modern technologies, can enable insurers to

create a transparent yet capable customer-focused claims model. The model
should depend heavily on trust which means that it needs to be transparent to a
great degree.

• The claims prevention aspect of insurance can benefit heavily from the
information regarding the event’s location, analytics, and external risks associated
with the event.

• Blockchain’s distributed nature enables an implementation method that puts both

insurer and the claimant in the same network. The insurers or other third-party
parties can easily capture information regarding forms, police reports, evidence,
and soon. Other key aspects of technology that can help in the process can be
either mobile phones or sensors attached to the other devices attached either to the
entity or around the area where the event takes place.
Property and Casualty Insurance: Current Issues and Problems
• Property and casualty insurance is one of the most important segments of insurance as it is used
heavily by individuals, start-ups, or even enterprises. This type of insurance accounts for 48% of
all US premiums and is considered significant all across the world. However, it is also plagued
with problems such as data evaluation for claim processing, manual data entry, coordination across
parties, and so on. The manual data entry also leads to errors which later result in the loss for any
of the parties depending on the type of error that occurred.

• The lack of a proper framework for claims processing hurts the end-user. For example, if your
house got damaged due to negligence, then you need to fill the claims papers and then ask for
claims from your insurance provider. Once done, the insurance company will then proceed with
the claims and verify them.

• However, it can get delayed or halted depending on how the offender’s insurance company
handles the claim. This issue occurs due to the mismatch between how the insurers handle the
claims from their clients.
How Can Blockchain Help with Claims Property and Casualty
Insurance?
• Blockchain can help solve the current problems of property and casualty insurance. The
approach is to manage the physical assets digitally. This also means that business rules can be
implemented and executed automatically. In short, claims can be processed automatically by
using smart contracts. Also, all the changes can be traced for authenticity which makes them
auditable.

• The key here is smart contracts as it offers the required functionality of changing paper
contracts into programmable code. The smart contracts, in turn, can be then automatically
executed by taking in all the information and then executing it accordingly. The liabilities can
also be calculated using smart contracts which then can be paid out to all the participants.

• Auto insurance can take benefit of the overall technological growth as the sensors on the
vehicle can be sent automatically if a crash happens. The smart contract will automatically
take the next steps such as towing or medical services.
Health Insurance: Current Issues and Problems

• One of the major issues includes non-access to patient’s data due to

confidentiality. This leads to a lack of information/data required for the claim
insurance which costs both hospitals and the patient.

• Any patient dealing with health issues is bound to visit multiple doctors across his
lifetime. This leads to issues when sharing information from one doctor to
another. Overall, everyone in the healthcare industry ecosystem including
insurers, providers, and patients suffers from glaring issues.

• Most of the time, a healthcare organization will store the information in their own
silos rather than share it with other service providers. Also, there is an issue of
duplicate or error information that gets stored without any form of the rectification
process. Non-usage of the connective framework also means more administrative
overhead and even a headache for the patients.
Blockchain in Health Insurance: Solutions

• Blockchain is a cryptographically secure network that provides healthcare with the necessary
infrastructure to function properly. It can be used to create privacy in the network and in
return help the healthcare industry save billions of dollars.

• The main objective of blockchain to create a network that ensures that the patients are always
in control of their medical data. By doing so, they can let patients decide when and how their
data is shared with the practitioners or medical institutes.

• The overall impact of the blockchain on healthcare means that insurance can also function as
it should. They can use the blockchain network for the medical records of the patients and
ensure that they are correct. As blockchain uses a cryptographic signature it ensures data
cannot be manipulated by any means.
Reinsurance: Current Issues and Problems

• Reinsurance is also a big part of the insurance industry. They protect the insurers

and protect their interest when natural disasters take place. Just like insurance
helps people to mitigate risks and manage unexpected life events, reinsurance also
does the same for insurers.

• The current solution used by reinsurance is inefficient at best. It is manually

processed and determined by one-off contracts. The current situation leads to
complexities as each contract is explicitly written which covers partial risk or a
specific event. The real issue happens when the event occurs. It can take up to 3
months for a contract to be decided which makes the whole process hard to carry
on for both parties.

• For insurers, reinsurance is all about mitigating risks when the odds are against
them. For example, in natural disasters and mass health epidemics, reinsurance
can help insurance cope with all the claims and demands.
How Can Blockchain Help with Reinsurance?

• As discussed above, reinsurance suffers heavily from the lack of information flow between
organizations. Blockchain technology can help solve the problem by providing a streamlined
network for information exchange between the parties.

• The use of a shared ledger is the key here where the necessary information is updated as so
n as it becomes available. This means that both the parties, insurers, and reinsurers can
connect and share information to settle claims faster.

• This efficiency can help the industry function more efficiently and hence decrease the
operational cost associated with it. Consumers also benefit from it as it reduce the overall
cost associated with claim.
Applications That Improve Blockchain for Insurance

1 . A Special Use-Case: IBM Blockchain

2. Blockchain Marine Insurance
3. Blockchain in Life Insurance

Steps Required Blockchain for Insurance to Mature and Adoption:-

• Internal Proof of Concept

• Customer-Centric Processes
• IoT Enablement
Conclusion

The need for blockchain is paramount in almost every industry out

there. Insurance is not different and can immensely benefit from the
blockchain. In this article, we discussed the important use cases that are
related to blockchain for insurance. The key use cases include fraud
detection prevention, claims management and prevention, and so on.
Also, it will take time to implement blockchain in insurance, and the
insurers first need to implement it internally before others can adopt it.
The precedence needs to be set by a few insurers and reinsurance before
the real change can start.
THANK YOU
Ethereum construction

BHUSHAN NAVGIRE
ME CAD/CAM AND ROBOTICS
INTRODUCTION :

Ethereum is a Decentralized open-source blockchain with Smart contract functionality. Ether  is the

native  Cryptocurrency  of the platform. Among cryptocurrencies, Ether is second only to Bitcoin
in Market capitalization.

Ethereum was conceived in 2013 by programmer Vitalik buterin

The platform allows anyone to deploy permanent and immutable Decentralized applications onto it, with
which users can interact. Decentralized finance applications provide a broad array of financial services
without the need for typical  finance intermediaries  like  Brokerages,  exchanges, or  banks, such as
allowing cryptocurrency users to borrow against their holdings or lend them out for  interest. Ethereum
also allows for the creation and exchange of  NFT’s which are non-interchangeable tokens connected to
digital works of art or other real-world items and sold as unique digital property. Additionally, many
other cryptocurrencies operate as ERC-20 tokens on top of the Ethereum blockchain and have utilized
the platform for  initial coin offerings.
How Ethereum Works
• In this section, we will see how Ethereum works from a user's point of view. For this purpose, I
will present the most common use case of transferring funds. In our use case, from one user
(Bashir) to another (Irshad). We will use two Ethereum clients, one for sending funds and the
other for receiving. There are several steps involved in this process which are described here.
• First either a user requests money by sending the request to the sender, or the sender decides to
send money to the receiver. The request can be sent by sending the receivers Ethereum address to
the sender. For example, there are two users, Bashir and Irshad. If Irshad requests money from
Bashir, then she can send a request to Bashir by using QR code. Once Bashir receives this request
he will either scan the QR code or manually type in Irshad's Ethereum address and send Ether to
Irshad's address.
• Once Bashir receives this request he will either scan this QR code or copy the Ethereum address in
the Ethereum wallet software and initiate a transaction
• Once the request (transaction) of sending money is constructed in the wallet software, it is then
broadcasted to the Ethereum network. The transaction is digitally signed by the sender as proof
that he is the owner of the Ether.
• This transaction is then picked up by nodes called miners on the Ethereum network for verification
and inclusion in the block. At this stage, the transaction is still unconfirmed.
• Once it is verified and included in the block, the PoW process starts. Once a miner finds the
answer to the PoW problem, by repeatedly hashing the block with a new nonce, this block is
immediately broadcasted to the rest of the nodes which then verifies the block and PoW.

• Finally, Irshad gets the Ether, and it is shown in her wallet software.

In the next section, we will see that what components make up the Ethereum ecosystem. Once we
have understood all the theoretical concepts, we will see in detail that how the aforementioned
transaction travels through the Ethereum blockchain to reach the beneficiary's address. At this point,
we will be able to correlate the technical concepts with the preceding transfer transaction example.
The Ethereum network

The Ethereum network is a peer-to-peer network where nodes participate in order to maintain the
blockchain and contribute to the consensus mechanism. Networks can be divided into three types,
based on requirements and usage. These types are described in the following subsections

Mainnet

Mainnet is the current live network of Ethereum. The current version of mainnet is Byzantium
(Metropolis) and its chain ID is 1. Chain ID is used to identify the network.
Testnet

Testnet is also called Ropsten and is the widely used test network for the Ethereum blockchain. This
test blockchain is used to test smart contracts and DApps before being deployed to the production
live blockchain. Moreover, being a test network, it allows experimentation and research. The main
testnet is called Ropsten which contains all features of other smaller and special purpose testnets that
were created for specific releases. For example, other testnets include Kovan and Rinkeby which
were developed for testing Byzantium releases.The changes that were implemented on these smaller
testnets has also been implemented on Ropsten. Now the Ropsten test network contains all properties
of Kovan and Rinkeby.
Private net

As the name suggests, this is the private network that can be created by generating a new genesis
block. This is usually the case in private blockchain distributed ledger networks, where a private
group of entities start their blockchain and use it as a permissioned blockchain.
Components of the Ethereum ecosystem

A formal list of all high-level elements present in the Ethereum blockchain is presented here:

• Keys and addresses

• Accounts
• Transactions and messages
• Ether cryptocurrency/tokens
• The EVM
• Smart contracts
Keys and addresses

Keys and addresses are used in Ethereum blockchain mainly to represent ownership and transfer of
Ether. Keys are used in pairs of private and public type. The private key is generated randomly and is
kept secret whereas a public key is derived from the private key. Addresses are derived from the
public keys which are a 20-bytes code used to identify accounts.

The process of key generation and address derivation is described here:

• First, a private key is randomly chosen (256 bits positive integer) under the rules defined by
elliptic curve secp256k12.
• The public key is then derived from this private key using ECDSA recovery function.
• An address is derived from the public key which is the right most 160 bits of the Keccak hash of
the public Key.
Accounts

Accounts are one of the main building blocks of the Ethereum blockchain. Ethereum, being a
transaction driven state machine, the state is created or updated as a result of the interaction between
accounts and transaction execution. Operations performed between and on the accounts, represent
state transitions. The state transition is achieved using what's called the Ethereum state transition
function, which works as follows

1. Confirm the transaction validity by checking the syntax, signature validity, and nonce.

2. The transaction fee is calculated, and the sending address is resolved using the signature.
Furthermore, sender's account balance is checked and subtracted accordingly, and nonce is
incremented. An error is returned if the account balance is not enough.
1. Provide enough Ether (gas price) to cover the cost of the transaction. We will cover gas and
relevant concept shortly in this chapter. This is charged per byte incrementally proportional to the
size of the transaction. In this step, the actual transfer of value occurs. The flow is from the
sender's account to receiver's account. The account is created automatically if the destination
account specified in the transaction does not exist yet. Moreover, if the destination account is a
contract, then the contract code is executed. This also depends on the amount of gas available. If
enough gas is available, then the contract code will be executed fully; otherwise, it will run up to
the point where it runs out of gas.
2. In cases of transaction failure due to insufficient account balance or gas, all state changes are
rolled back except for fee payment, which is paid to the miners.
3. Finally, the remainder (if any) of the fee is sent back to the sender as change and fee are paid to
the miners accordingly. At this point, the function returns the resulting state which is also stored
on the blockchain.
Transactions and messages

A transaction in Ethereum is a digitally signed data packet using a private key that contains the
instructions that when completed, either result in a message call or contract creation. Transactions
can be divided into two types based on the output they produce.

• Message call transactions: This transaction simply produces a message call that is used to pass
messages from one contract account to another.
• Contract creation transactions: As the name suggests, these transactions result in the creation of
a new contract account. This means that when this transaction is executed successfully, it creates
an account with the associated code.
Contract creation transaction

There are a few essential parameters that are required when creating an account. These parameters
are listed as follows
• Sender
• Original transactor (transaction originator)
• Available gas
• Gas price
• Endowment, which is the amount of ether allocated
• A byte array of an arbitrary length
• Initialization EVM code
• Current depth of the message call/contract-creation stack (current depth means the number of
items that are
• already there in the stack)
Message call transaction

A message call requires several parameters for execution, which are listed as follows
• The sender
• The transaction originator
• Recipient
• The account whose code is to be executed (usually same as the recipient)
• Available gas
• Value
• Gas price
• Arbitrary length byte array
• Input data of the call
• Current depth of the message call/contract creation stack
Transactions and messages

Messages, as defined in the yellow paper, are the data and value that are passed between two
accounts. A message is a data packet passed between two accounts. This data packet contains data
and value (amount of ether). It can either be sent via a smart contract (autonomous object) or from
an external actor (externally owned account) in the form of a transaction that has been digitally
signed by the sender.
A message consists of the components mentioned here:
• The sender of the message
• Recipient of the message
• Amount of Wei to transfer and message to the contract address
• Optional data field (Input data for the contract)
• The maximum amount of gas (start gas) that can be consumed
The Ethereum Virtual Machine (EVM)

EVM is a simple stack-based execution machine that runs bytecode instructions to transform the
system state from one state to another. The word size of the virtual machine is set to 256-bit. The
stack size is limited to 1024 elements and is based on the Last In, First Out (LIFO) queue. EVM is a
Turing-complete machine but is limited by the amount of gas that is required to run any instruction.
This means that infinite loops that can result in denial of service attacks are not possible due to gas
requirements. EVM also supports exception handling, in case exceptions occur, such as not having
enough gas or invalid instructions, in which case the machine would immediately halt and return the
error to the executing agent.

EVM is an entirely isolated and sandboxed runtime environment. The code that runs on the EVM
does not have access to any external resources, such as a network or filesystem. This results in
increased security, deterministic execution and allows untrusted code (anyone can run code) to be
run on Ethereum blockchain.
THANK YOU