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5 Real-world Blockchain Use-cases in Insurance Industry

Nearly 80% of insurance executives have either already adopted or planning to pilot blockchain technology across their business units. The level of trust, transparency, and immutability that blockchain (distributed ledger technology) provides is impeccable. 

blockchain insurance use cases- benefits

Blockchain offers an independently verifiable dataset so that insurers, as well as customers, need not suffer from decisions based on inappropriate/incomplete information. In the instances of travel insurance, blockchain-based systems use external data sources to validate whether a flight was missed or canceled. Accordingly, insurers can decide on processing refund claims. Well, blockchain can handle even more complex situations of road accidents by accurately determining the vehicle or human fault.

The 5 practical blockchain use-cases in the insurance industry are-

  1. Fraud detection
  2. IoT & Blockchain together to structure data
  3. Multiple risk participation/Reinsurance
  4. On-demand insurance
  5. Microinsurance

Fraud Detection

In the US alone, every year fraudulent claims account for more than $40 billion, which is excluding health insurance. Despite digitization, the standard methods fail to recognize fraud. Blockchain can help in fraud detection and prevention to a great extent. 

Blockchain ensures that all the executed transactions are permanent and timestamped. I.e. no one, including insurers, can modify the data preventing any kind of breaches. This data can further help in defining patterns of fraudulent transactions, which insurers can use in their fraud prevention algorithms. 

Fraud detection using blockchain use case: Etherisc

Powered by smart contracts, Etherisc independently verifies claims by using multiple data sources. For example, for crop insurance claims, it compares satellite images, weather reports, and drone images with the image provided by the claimant. 

IoT & Blockchain together to structure data

As IoT will connect more and more devices, the amount of data generated from each of the devices will increase significantly. For instance, there were 26.66 billion active IoT devices in 2019 and nearly 127 IoT devices connect to the internet every second

This data is extremely valuable for insurers to develop accurate actuarial models and usage-based insurance models. Considering the auto insurance sector, the data collected about driving time, distances, acceleration, breaking patterns, and other behavioral statistics can identify high-risk drivers. 

But, the question is — how to manage the enormous data as millions of devices are communicating every second. 

And the answer is a blockchain!

It allows users (insurers) to manage large and complex networks on a peer-to-peer basis. Instead of building expensive data centers, blockchain offers a decentralized platform to store and process data. 

Multiple risk participation/Reinsurance

Reinsurance is insurance for insurers. It protects the insurers when large volumes of claims come in. 

Also read – 5 biggest insurance claims payouts in history

Because of information silos and lengthy processes, the current reinsurance system is highly inefficient. Blockchain can bring twofold advantages to reinsurers. One — unbreached records for accurate claims analysis and two — speeding-up the process through automated data/information sharing. PwC estimates that blockchain can help the reinsurance industry save up to $10 billion by improving operational efficiency.

For example, in 2017, B3i (a consortium for exploring blockchain in insurance) launched a smart contract management system for Property Cat XOL contracts. It is a type of reinsurance for catastrophe insurance.

On-demand insurance

On-demand insurance is a flexible insurance model, where policyholders can turn on and off their insurance policies in just a click. More the interactions with policy documents, the greater the hassle to manage the records. 

For instance, on-demand insurance requires underwriting, policy documents, buyers records, costing, risk, claims, and so on much more than traditional insurance policies.

But, thanks to blockchain technology, maintaining ledgers (records) has become simpler. On-demand insurance players can leverage blockchain for efficient record-keeping from the inception of the policy until its disposal. An interesting blockchain insurance use cases is that of Ryskex — a German InsurTech, founded in 2018. It provides blockchain-powered insurance platform to B2B insurers to transfer risks faster and more transparently. 

Microinsurance

Instead of an all-encompassing insurance policy, microinsurance offers security against specific perils for regular premium payments, which are far less than regular insurances. Microinsurance policies deliver profits only when distributed in huge volumes. However, because of low profit-margin and high distribution cost, despite immediate benefits, microinsurance policies don’t get the deserved traction. 

Blockchain can offer a parametric insurance platform. With this, insurers will need fewer local agents and “oracles” can replace adjusters on the ground. For example, Surity.ai uses blockchain to offer microinsurance to the Asian populace, especially those not having access to the services of banks or other financial organizations. 

For further queries around blockchain / insurance use cases, please feel free to drop us a word at hello@mantralabsglobal.com.

Related blockchain articles – 

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Benefits of API security testing

By :
5 minutes, 24 seconds read

Cybersecurity is a growing concern amid businesses from all quarters. It has become even more crucial amid COVID-19 pandemic when many businesses relying solely on the online medium for business transactions. Organizations all over the world have lost nearly 1$ trillion due to cyberattacks in 2020. Data security breaches, payment hacks, and security risks can cripple your business and ruin your brand image. Hence, it has become business-critical to get your apps tested thoroughly for any security loophole.

Why API security testing?

Application Programming Interface or API, as the name suggests, is the intermediating software or application that allows two endpoints to communicate with each other. Each time, we use an app like social networking app, gaming app, or any other application to send or receive the message, our action passes through a programming interface that connects sender and receiver.

That means securing the data sent to the receiver through an API is very important. Hackers may extract the data and use it in their illegal acts. Ensuring the security of an API before, during, and after the production of any project through testing is what we are going to discuss in detail under API security testing.

Developers use security tests to ensure their applications and web services are 100% safe from unwanted attacks and are not disclosing any sensitive information to the hacker. API Security tests pass through various types of security checks. Each of them has been designed to detect certain vulnerabilities. One security test with multiple security scans gives you the guarantee of your service and you can get assured that your services are well-protected against malicious attacks.

API Security Testing is the only way to ensure that any web service is protected from foreign attacks or not before communication is established between the two endpoints.

Let us highlight the Benefits of API security testing:

  1. Tester can detect error without the user interface

The main advantage of API security testing is that the tester can easily access the application without the user’s involvement. Under this testing system, testers can detect the error at an early stage without running the software application. This is beneficial because it helps QA rectify the error before it impacts the Graphical User Interface.  

  1. Removes vulnerabilities

API testing is done under extraordinary conditions and inputs, which protects the application from unlawful code. API testing adds connecting limits to the software and removes any type of vulnerabilities.

  1. Less time-consuming than functional GUI testing

API testing consumes less time as compared to functional GUI testing. Under GUI testing, developers poll all webpages elements so it takes time. API, on the other hand, requires less coding, and so deliver faster results. A team of engineers analyzed the test results and found that 3000 API test results consumed 50minutes whereas 3000 GUI test consumed 30 hours. 

  1. Testing cost is reduced

As we just said, API testing requires less code than GUI so we can expect to get faster results. The faster results mean, less time, and overall, less testing cost. Early error detection reduces the manual testing cost as well. 

  1. Does not depend on Technology 

API Security Testing uses XML or JSON languages consisting of HTTP requests and responses. These languages do not depend on technology and are used for development. That means testers can use any core language while using automated API testing services for an application.

With so many benefits of API security Testing, the demand continues to rise and so is the challenge to close security holes that may impact the safety of the corporate and customer data. Businesses need to make sure that their API testing does not create any security problem and is flawless.

We are here with some of the best practices for API security testing:

  1. Think out of the box 

It is generally seen that developers work on one small set of services while testing to make that particular set as strong as possible. The problem these days is, front ends and back ends are connected to so many components that Hackers can easily find out one or the other way to enter the software; so developers need to think out of the box to fix this issue. 

  1. Open communication between a tester and a developer can solve the problem

Communication has been a challenge. It can be used as a solution when an open channel of interaction between the testers and developers is established to reduce the defects making the API security testing process easier and faster. 

  1. Thorough check-up of add-on software

The easy usage of API often creates problems. One popular usage is that allows third parties to write add-on apps. Mobile solutions and social media platforms, like Facebook, Instagram, depend on others to add value to their platform. Hackers grab those opportunities and try to get maximum information from such systems or platforms.

  1. Take standards judiciously

Suppliers work on standards to improve API security, but not all follow these standards. The Internet Engineering Task Force’s OAuth is an open authorization standard, that gives clients secured restricted access to system resources without highlighting their credentials. Most Internet users use this standard to log into third-party websites via their Microsoft, Google, Facebook, or Twitter accounts.

The problem comes when the standard is based on HTTP, which already has errors, and APIs add extra feasibility for hackers in such cases.

  1. Try to get authorization and authentication on the front end

Developers tie APIs into other elements of the software. To secure any code, developers need to adopt a strong approach. The process starts with authentication, which checks to see if a person is the same as he or she says they are. Enterprises have moved from simple password systems to multistep authentication emphasizing biometric solutions like fingerprints. Once the authentication process is done, they move to the authorization check to get access to more information.

  1. Don’t forget to check data on the back end

Developers work hard to protect the data on the front end but hackers are smart and they find their way to attack your system. Businesses must incorporate another checkpoint on the back end. If any hacker accesses confidential data, it should have value only when he or she moves the data to their systems. In simple words, we can say, if you miss any criminal on the front end, you still have a chance to catch him or her on the back end.

These are some of the API testing best practices that every business should adopt to close the security holes that may impact their application in the future.

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