Korea Insurance Institute and Bank of Korea Agree to Form Joint Task Force for Digital Currency-Based Index Insurance Development

Strengthening the Social Safety Net for Climate and Disasters

Promoting Commercialization of Digital Currency with Instant Compensation Systems

The Korea Insurance Institute and the Bank of Korea announced on April 13 that they have agreed to establish a joint task force (TF) to develop index insurance based on the Bank of Korea's digital currency.

At the Bank of Korea headquarters in Jung-gu, Seoul, on the 9th, the "Memorandum of Understanding between the Insurance Training Institute and the Bank of Korea for the Use of Digital Currency and Deposit Tokens" was held. From the left: Tae Kyung Ha, President of the Insurance Training Institute, and Changyong Lee, Governor of the Bank of Korea. Insurance Training Institute

This is a follow-up to the "Phase 2 Business Agreement for the Han River Project on the Use of Digital Currency and Deposit Tokens."

According to the Institute, at the signing ceremony for the Phase 2 pilot project agreement of the Han River Project held on April 9, President Hataekyung proposed the need for "joint development of digital currency-based index insurance," and Governor Lee Changyong agreed, leading to the consensus on forming the task force.

The two institutions plan to begin working-level discussions soon to launch the joint TF. The task force will focus on research and development of a proof-of-concept model that combines the technological advantages of digital currency with the efficiency of index insurance.

Index insurance is a product in which insurance payouts are made automatically without separate assessments if certain predefined indices—such as weather events like heatwaves or heavy rain, or delays in flights and subways—meet the set criteria. Integrating the Bank of Korea’s digital currency and deposit tokens into index insurance is expected to enhance trust among insurers and customers, and to significantly contribute to the commercialization of digital currency.

Governor Lee stated, "The 'digital currency-based index insurance' proposed by the Institute is an excellent example demonstrating the real-world utility of digital currency. We have confirmed that digital currency is ideally suited not only as a payment method but also to perform a public function by instantly providing disaster compensation."

President Hataekyung said, "Digital currency-based index insurance is an innovative model that combines the technological advantages of digital currency—such as deposit tokens—with the efficiency of index insurance, which eliminates the need for assessment procedures. This enables insurance payouts without complex processes, dramatically reducing labor and other operational costs."

He added, "If applied to disasters like heatwaves and heavy rain, or to transportation delays such as flight or subway disruptions, this model can provide immediate compensation without verification procedures when incidents occur, thereby offering practical help to vulnerable groups. We will continue to pursue the demonstration of an innovative economic system based on digital currency."

This content was produced with the assistance of AI translation services.