CAS Practice Exam 2025 – Complete Study Guide

The correct answer highlights a significant trend in the insurance industry driven by advancements in technology. Smart contracts, enabled by blockchain technology, are automating processes in a way that drastically reduces the amount of paperwork traditionally required in insurance transactions. This innovation allows for faster processing times and greater accuracy in handling claims and underwriting processes.

Additionally, smart contracts can automatically execute transactions based on predefined conditions being met, further streamlining operations and improving transparency. This shift toward automation lessens the reliance on manual processes, which not only mitigates the potential for human error but also enhances efficiency throughout the insurance value chain. The reduction in paperwork is a major benefit, as it allows both insurers and policyholders to interact in a more straightforward manner, ultimately making the financing of risk more efficient and accessible.

In contrast, the other options present scenarios that do not accurately reflect the positive changes technology is bringing to the industry. Options that suggest increasing prices, reducing coverage, enhancing paperwork, or limiting customization overlook the transformative effects that technological innovations like smart contracts have in fostering a more adaptable and customer-centered insurance landscape.