For the insurance industry, the promise of the blockchain is tantalizing: it holds the promise of creating transactions and exchanging money almost instantly between consumers and organizations.
While it has never been tried with an insurance transaction, that will change as Kyobo Life, an insurance operator backed by the South Korean government, will run the first trial of blockchain technology for commercial insurance money payments this year. If successful, it could change how insurance and financial products are transacted around the world.
Kyobo Life Insurance was officially selected by the government to operate the a pilot blockchain project that is being used by the South Korean government to promote its internet of things (IoT) infrastructure.
The current process of making a medical insurance claim for small amounts of insurance money typically sees the policyholder pay medical costs to the hospital first, before receiving documentation of these costs from the hospital. The holder would then reach out to the insurer to make that claim with the supporting documents to get the insurance money.
The time-intensive system exists this way because most medical data is not immediately accessible by insurance companies for privacy and data security issues. An immutable blockchain platform could reduce the complexity of the transaction and preserve data security.
“The whole process is finished in five seconds after the policyholder agrees,” Chung Kyu-shik, senior manager at Kyobo Life’s FinTech team, told the Korea Times
Further, the blockchain platform will also allow insurers to check if the policyholder has legitimately paid the medical costs to the hospital or has made double claim.