Comparative Study of the Current Processes used by Insurance Companies and application of Block Chain Technology on Business Performance in Kenya

Abstract

The insurance industry has been engaging in numerous processes which are characterized by the exchange of data updated by multiple parties, they have ramped up investments in their digital agenda to be at par with other industries. However, despite of such enormous investments, thousands of fraud cases have been reported and many more could have gone unreported on the same platforms intended to increase efficiency. Blockchain, as a single source of truth, has the potential to increase transparency, efficiency and reduce the complexity of these processes. This research was carried out to compare the current processes used by insurance companies and influence of block chain technology on business performance in Kenya. The specific objectives of the study were; To establish the procedures used by insurance companies in Kenya; to establish the challenges of the current processes used by insurance companies on business performance; to establish the level of awareness in insurance companies on block chain technology on their business performance and to establish the awareness of the benefits of block chain technology on business performance of insurance companies. The study was descriptive in nature, both qualitative and quantitative data was collected. Stratified random sampling technique was used to select 16 companies out of the 52 insurance companies registered in Kenya, based on their domain of operation. The findings of the study were; there is no common procedures for all insurance companies in Kenya even those operating in the same domain; communication between clients and company, verification of payment details, misappropriation of clients’ premiums, missing records of payments, legal reporting systems are the key challenges facing receiving and making client’s payment; Lack of transparency between the parties involved in receiving payments, management misunderstanding, legal reporting systems fraudulent transaction, presentation of fictitious claims, provision of correct information/data, communication between the client and the company, misappropriation of clients’ payments, missing record of payment, verification of payment details are the risks involved in making payment to clients. Most organizations are aware of block chain but have not implemented it in their processes. The following were identified as the key benefits insurance companies can enjoy by adopting block chain technology; reduce fraud; fasten claim settlements; increase transparency among parties; increase data security and integrity; increased speed of digitization and reduce backend tasks. There is need for policy guideline on operations of insurance companies. The study recommends further research to be done on challenges that insurance companies face in adopting block chain technology.