‘Blockchain will bring innovations to insurers’
Applying blockchain technology to the insurance business will significantly improve customer convenience, said Chung Kyu-shik, senior manager of Kyobo Life Insurance’s fintech taskforce.
Last week, the insurer became one of four operators of blockchain pilot projects supported by the government. Blockchain refers to a decentralized electronic ledger technology which gained fame as it underpins the digital currency of Bitcoin.
Organized last July, Chung’s team was the only one with a financial background. They applied the state-of-the-art technology to the process of insurance claims. Kyobo says it will be the first in the world to use the futuristic technology in the insurance industry.
“There will be much room to apply blockchain to insurance,” Chung told The Korea Times, Monday. “The technology is expected to accelerate and streamline the whole process of making a claim and receiving insurance money. Though it is in its infant stage, we believe we can commercialize the service soon to upgrade Kyobo’s services to a new level.”
Instead of the conventional idea of having a trusted entity to keep track of any transactions, blockchain allows all participants or entities to record all transactions continuously and sequentially. By doing so, involved entities will have common authority on the records and save costs required for keeping the record uncompromised.
Chung explained the nature of the technology will shorten the process of making a claim.
Currently, clients seeking insurance coverage for their injuries or sickness have to follow a complicated and annoying claims process. First, a policyholder needs to pay medical costs to the hospital and then receives proving documentation from the hospital. Then, they have to contact the insurer to make a claim and get insurance money.
Policyholders have to go through such hassles because medical data is off-limits to insurance companies due to concerns of data leaks. Chung believes blockchain can make things much easier without compromising data security.
By building a blockchain network between the insurer and the hospital, the policyholder can receive benefits by just telling hospital clerks they hold a policy. The hospital clerk can check the policyholder’s insurance information through the ledger held by the insurance firm.
Upon the agreement of the policyholder, the system will automatically send proving documentation to the insurer. Then, the insurer is required to check the ledger and pay insurance money to the policyholder.
“The whole process is finished in five seconds after the policyholder agrees,” Chung said.
Through checking the ledger, the insurer can know w hether the policyholder actually paid the medical costs to the hospital or made double claims on a single case.
“Currently, the system will require policyholders to remember which policies they hold,” Chung said. “But we believe we can address that too so policyholders would not have to remember which policies they hold and their details.”
According to the firm, it plans to sign deals with major hospitals in Seoul and adjacent areas to start the project by the end of this year. It will cover cases whose insurance money is less than 300,000 won. After testing, the insurer plans to expand the system to large hospitals across the country and all of its policyholders.