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U.S. insurance giant State Farm and financial services company USAA have announced that they are trialing blockchain technology for enhancing the speed of the auto claims subrogation process.
Usually the last step of an insurance claims process, subrogation involves one insurance company recovering claim costs it paid to its customer for damages from the at-fault party’s insurance company, which includes its customer’s deductible.
State Farm first announced that it was testing a blockchain solution for accelerating the subrogation process for auto claims in December 2018.
In its latest press release, State Farm said that it started working with USAA in early 2018 and has now announced a joint subrogation solution. The companies are using real claims data for testing blockchain potential to speed up the auto claims subrogation process.
The solution, according to CoinDesk, has been built using Quorum, the private enterprise version of ethereum developed by JPMorgan Chase.
Mike Fields, Innovation Executive, State Farm, pointed out that subrogation is a relatively manual, time-consuming process which often requires physical checks to be mailed on a claim-by-claim basis between insurers.
By leveraging blockchain technology, the companies aim to increase the efficiency of the process by automating compiling all subrogation payment amounts, netting the balance, and facilitating a single payment on a regular basis between insurers.
“The blockchain solution we are working on has many potential benefits,” says Ramon Lopez, Vice President, Innovation, USAA. “It helps us automate a manual process securely and creates a permanent transaction record of each payment which can easily be verified for accuracy. It also has the potential to decrease the amount of time for consumers to receive their deductible reimbursement.”
The companies plan to continue testing to determine if the blockchain solution can be a viable product for industry adoption.
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