Introducing Distributed Ledger Technology into Healthcare Insurance Automation: The Role of Tokenized Wallets

Abstract

Healthcare insurance systems continue to face critical inefficiencies, including lengthy claim processing, high fraud incidence, and privacy risks originating from manual verification processes and unnecessary data exposure. This paper proposes a novel blockchain-based architecture that leverages tokenized wallets and Non-Fungible Tokens (NFTs) to automate healthcare insurance claims while enhancing security. NFTs encode individual insurance policies as smart contracts that automatically verify eligibility and trigger settlements. Tokenized wallets enable encrypted, privacypreserving interactions, minimizing data exposure to insurers and aligning with GDPR requirements. The system integrates with Electronic Health Records (EHRs), allowing real-time validation of medical bills while safeguarding sensitive data. A complete prototype was built on a private Ethereum testnet, MetaMask wallets, and Solidity smart contracts, demonstrating a reduction in claim processing time to below 2 minutes. Stakeholder feedback showed over 85% agreement on improved efficiency, privacy, and fraud reduction. This research makes three key contributions: (1) a scalable, GDPR-compliant blockchain framework for insurance automation, (2) an innovative use of NFTs and smart contracts for real-time claim processing, and (3) a validated proof-of-concept showing practical feasibility.