The state government of Illinois has quietly established a working group tasked with developing a strategy for integrating blockchain tech.

The working group, put in place earlier this year, draws representatives from several public agencies, including the state’s Department of Innovation and Technology, Department of Financial and Professional Regulation and the Department of of Insurance. Its mandate: identify the ways that blockchain could make government services more efficient, while at the same time making it easier for citizens to do business with state agencies.

Anne Melissa Dowling, director of the state's Department of Insurance, says her office is engaged in an aggressive self-education campaign, with an eye to be among the first agencies of its kind in the US to utilize the technology.

Dowling told CoinDesk:

In interview, she cited the use of a distributed ledger to reduce friction between Illinois insurance companies, regulators and policy holders as one area for potential applications. Specifically, the state is looking at how the tech could help speed the process by which actuaries determine the financial consequencies of an event, she said.

But like any state institution, Illinois isn't going to take the blockchain leap overnight. Dowling and her colleagues taking part in the Illinois blockchain working group need to bring industry stakeholders to the table to hammer out what those applications might look like.

The need to build a network effect is high on Dowling’s list of concerns. The need to lobby many different entities in order to build a workable solution is one of the biggest hurdles she expects to encounter. Beyond that, she cited a lack of any legal precedent for such a move, nor the means as of yet to design or build a blockchain-based system.

"In concept its an absolutely beautiful thing," Dowling explained. "But we need to have a little more experience we need to spend a little more time with the data."

Even if just the Department of Insurance moved some of its services to the blockchain, the scope of the agency's work highlights the scale at which any future service would have to accommodate – and the potential risks. In a 2014 report, the agency said it made $443 million in revenue, dispersing $38m in payments.

The department also runs the state's health insurance marketplace as mandated by the Affordable Care Act of 2010. That exchange, Get Covered Illinois, has faced headwinds in the years since the law's passing (like others of its kind), and in 2015 the government began revamping and streamlining that system – a process that might one day draw on the blockchain working group's work.

Despite the hurdles, that doesn't mean that shift needs to be complicated.

William Mougayar, consultant and author of The Business Blockchain, said in an interview that an invitation-only "semi-private" blockchain initiated by the state would be a strong basis to welcome in market stakeholders. The real challenge, he said, lies in getting regulators on board – in this case, the National Association of Insurance Commissioners.

"I suspect that the regulatory aspect is a more critical hurdle that will need to be addressed," he said.

For now, Dowling and the rest of the group are still weighing their options. She said that even as she's expanding her own knowledge of the tech and its potential uses for her agency's services, she's still learning.

As part of that process, Dowling is scheduled to participate in a blockchain regulatory panel in Chicago on 8th November. She says her main objective in attending is to get as much of a hands-on education as possible.

In particular, Dowling says she’ll have her eyes open for "working models" that demonstrate how blockchain can be implemented in state-level insurance groups.

She concluded:

Image credit: Brian S / Shutterstock.com