Kyobo Life, a government-backed insurance operator, will trial the first-ever real-world implementation of blockchain technology for commercial insurance money payments in Seoul this year. If successful, the feature will significantly enhance customer convenience, particularly during the process of making and getting paid insurance money with a claim.
Last week, Seoul-based South Korean life insurance company Kyobo Life Insurance was officially selected by the government to operate the latter’s pilot blockchain project. The project seeks to lay the foundation to promote the governments’ agenda for promoting its internet of things (IoT) infrastructure.
Conducted by the National Information Agency under the management of South Korea’s Ministry of Science, ICT and Future Planning, the pilot will see Kyobo Life work in a consortium alongside blockchain technology startup ‘theLoop’, InsurTech specialist D Lemon and hospital medical record service company ‘One’.
Using a combination of blockchain technology and IoT authentication, the consortium is looking at developing and launching services that will pay out sums of insurance money to policyholders automatically.
In quotes reported by Business Korea, Kyobo Life senior MD of digital innovation stated:
This is the first case where the insurance industry is fully connected with fintech and introduces a new service. If the service is commercialized in the future, we will be able to provide a better service by utilizing various fintech technologies.
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 since medical data is not immediately accessible by insurance companies due to fears of data breaches. An immutable blockchain platform could provide much-needed respite whilst preserving data security.
A blockchain platform built between the insurer and the hospital will enhance the efficiency of this process while reducing the time taken for payments. A hospital clerk can check the policyholder’s insurance information through the ledger shared with the insurance firm. The hospital automatically sends the documentation to the insurer, which would then pay the insurance money to the policyholder.
According to the BK report, the process works even when the policyholder does not charge the insurance money. As details of the hospital medical fee payments and insurance contract are auto-authenticated, so too is the payment of the insurance money to the holder, even if it is not demanded by the holder first.
A separate report by KoreaTimes has a different take on the authentication process. It reveals that the policyholder would need to agree to send the hospital documentation to the insurer first before the latter pays the insurance money.
“The whole process is finished in five seconds after the policyholder agrees,” states Chung Kyu-shik, senior manager at Kyobo Life’s FinTech team.
Further, the blockchain platform will also allow insurers to check if the policyholder has legitimately paid the medical costs to the hospital or is faking a claim by making double claims with any case.
The burden of remembering policy details will no longer be a chore for consumers either, as the hospital’s end of accessing the blockchain ledger will have secure authenticated access to these details. A hospital clerk can check the insurance policy over the ledger when the policyholder reveals he or she simply holds a policy.
Kyobo Life has confirmed its plan to sign deals with a number of major hospitals in Seoul’s metropolitan and adjoining areas to start the pilot project by the end of 2017. For the trials, cases with small amounts of insurance money, under 300,000 won ( ~USD$270) will be covered.
Ultimately, the insurance operator plans to commercially expand the blockchain system to large hospitals across the country to cover all of its policyholders.
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