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Everledger Uses Block Chain to Combat Insurance Fraud

Last Updated March 4, 2021 4:44 PM
P. H. Madore
Last Updated March 4, 2021 4:44 PM

One of the main drives, since Bitcoin began gaining popularity, was the other possible uses of the blockchain technology that drives it. Some have found ways to build other data layers on top of the blockchain while others have found it possible to use the blockchain to secure copyright notices.

Everledger  has devised a way  that insurance companies can utilize the blockchain to ensure that the items they are insuring are what they are said to be. This is not entirely secure, in the sense that a dedicated scammer could find a way to modify the actual diamond or what have you that was being insured.

The company is considering moving the service away from just diamonds, however. All luxury goods could be insured using this technology, making keeping track of them and their value a lot easier for the companies providing the insurance. Eventually, the blockchain-based technology could be expanded to much bigger purchases, like houses and cars. There’s no reason it couldn’t work in much the same way though in those cases it might seem overkill since it’s not hard to find big purchases like those.

Thus far, the company has received 850,000 diamonds to catalog and submit to the blockchain, notarizing their ownership, essentially. Doing this makes the contract with the insurance company immutable and works in favor of both parties. The company makes money from its technology and for the service of utilizing the block chain’s notary capacities.

The interesting economic question for the insurance companies is whether or not this technology can save them money. The answer is that if they can recover the stolen diamonds after they have paid for them, then they may recover a portion or all of the money they had to payout. By having the diamonds marked and immutably entered into the blockchain as insured, once they go missing, and the company makes a payment on them, they belong to the company.

The technology could eventually be expanded to include something that would track the actual location of the item. The entry onto the blockchain would make it clear who owned the diamond when it was recovered. Uses like this can have very wide-ranging effects on real-world applications of database technology, where something cryptographically secure like the blockchain would be ideal.

Images from Shutterstock and Everledger.