The usage of blockchain in the insurance sector will rocket over the next five years, according to researchers, as the industry looks at ways of future-proofing.

Star Investing has written previously about some of the unique challenges facing the millennia-old industry, with experts recommending insurers innovate and embrace technology or face extinction.

Research firm MarketsandMarkets said that usage of blockchain components in insurance will see a compound annual growth rate of an astonishing 85 per cent over the next five years, reaching $2 billion by 2023.

And KPMG released a report on the sector this year noted that blockchain had gone beyond a buzzword and begun its usage in the industry, with players not making use of the technology missing out.

Kirill Bryanov, writing for CoinTelegraph, noted that blockchain is already being used in flight delay and lost baggage claims systems, and predicts its usage will become widespread across automating processes, fraud prevention, healthcare, life insurance and, in particular, peer-to-peer insurance.

“Peer-to-peer (P2P) insurance is a model that predates blockchain, although it is remarkably consonant with the ideology of decentralisation that permeates the crypto space. The idea is that, instead of relying on a central insurer and an underwriter, a group of individuals pool their resources together to create a safety net for whoever from their ranks incurs a loss as a result of an unforeseen event,” he says.

“However, for all the transparency and convenience of such friend pools, they can only scale up to a certain point before the need for professional, centralised management arises. Blockchain can help project the peer-to-peer insurance model to a new level of efficiency and scalability.”

This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.