[Paper Review] BIS- A Blockchain-based Solution for the Insurance Industry in Smart Cities

Maedeh Sharifinejad, Ali Dorri+1 more|arXiv (Cornell University)|Jan 15, 2020

Blockchain Technology Applications and Security8 references8 citations

TL;DR

This paper proposes BIS, a blockchain-based insurance framework for smart cities that enhances transparency, reduces fraud, and accelerates claims processing by using dynamic public keys for user anonymity and on-demand data sharing from sensors. A Proof of Concept demonstrates that BIS significantly reduces processing delays compared to conventional insurance methods.

ABSTRACT

Insurance is one of the fundamental services offered to the citizens to reduce their costs and assist them in case of an emergency. One of the most important challenges in the insurance industry is to address liability challenge and the forging of documents by the involved parties, i.e., insurance company or the users, in order to increase financial gain. Conventional methods to address this challenge is significantly time consuming and costly and also suffers from lock of transparency. In this paper, we propose a blockchain-based solution for the insurance industry in smart cities (BIS). BIS creates a big umbrella that consists of the smart city managers, insurance companies, users, and sensors and devices. The users are known by changeable Public Keys (PKs) that introduces a level of anonymity. The data collected by the sensors is stored in cloud or local storage and is shared with insurance company on demand to find the liable party that in turn increases the privacy of the users. BIS enables the users to prove and share the history of their insurances with other users or insurances. Using Proof of Concept (POC) implementation we demonstrated the applicability of blockchain in insurance industry. The implementation results prove that BIS significantly reduces delay involved in insurance industry as compared with conventional insurance methods.

Motivation & Objective

• To address the high costs and inefficiencies in traditional insurance systems caused by document forgery and lack of transparency.
• To enable secure, private, and auditable insurance claims processing in smart city environments.
• To allow users to prove and share their insurance history with minimal exposure of personal data.
• To reduce the time and cost of claims processing through decentralized, immutable blockchain records.
• To integrate smart city sensors and devices into a unified, trustworthy insurance ecosystem.

Proposed method

• BIS employs a permissioned blockchain architecture to ensure data integrity and immutability across stakeholders including users, insurers, and city managers.
• Users are assigned dynamic public keys (PKs) to provide a layer of anonymity while maintaining verifiable identity for claims.
• Sensors and devices collect real-time data, stored in cloud or local storage, and shared with insurers only when needed for liability determination.
• The system enables users to cryptographically prove their insurance history to other parties, enhancing trust and reducing duplication.
• A Proof of Concept (PoC) implementation validates the feasibility and performance improvements of the BIS framework.
• The solution leverages cryptographic techniques to ensure data confidentiality and integrity during transmission and storage.

Experimental results

Research questions

• RQ1 How can blockchain technology be leveraged to reduce fraud and improve transparency in insurance within smart cities?
• RQ2 What mechanisms can ensure user privacy while maintaining verifiable insurance records in a decentralized system?
• RQ3 How does dynamic public key management contribute to balancing anonymity and accountability in insurance claims?
• RQ4 To what extent can on-demand data sharing from IoT sensors reduce processing delays in insurance claims?
• RQ5 What performance improvements does a blockchain-based insurance system offer over conventional methods?

Key findings

• The BIS framework significantly reduces delays in insurance claims processing compared to conventional methods, as demonstrated by the PoC implementation.
• Dynamic public keys provide a balance between user anonymity and verifiable identity, reducing the risk of identity misuse.
• On-demand sharing of sensor data enhances privacy by limiting exposure to only necessary information during claims evaluation.
• The blockchain-based system ensures data immutability and auditability, reducing the potential for document forgery.
• The PoC implementation confirms the technical feasibility and scalability of integrating blockchain into smart city insurance ecosystems.
• The solution enables secure, transparent, and efficient sharing of insurance history across users and insurers without compromising data privacy.