Everledger Uses Block Chain to Combat Insurance Fraud

June 29, 2015 10:11 PM UTC
Posted in: Archive

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

Everledger has devised a way that insurance companies can utilize the block chain 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 block chain-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.

Also read: Factom Whitepaper Released: New Service Leverages Bitcoin Blockchain

Thus far, the company has received 850,000 diamonds to catalog and submit to the block chain, 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 pay out. By having the diamonds marked and immutably entered into the block chain 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 block chain 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 block chain would be ideal.

Images from Shutterstock and Everledger.

Last modified: May 21, 2020 11:08 AM UTC

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P. H. Madore @bitillionaire

P. H. Madore has written for CCN since 2014. Please send breaking news tips or requests for investigation to bitillionaire+phm@gmail.com. He lives in Maine, USA. A single father of four young children, he does not discourage financial donations, provided they do not come with strings attached.