Insurance companies State Farm and USAA are working on a project that tests how blockchain technology can improve the speed of the auto claims subrogation process.
Subrogation is typically the last phase of an insurance claims process, when one insurance company recovers claim costs it paid to its customer for damages from the at-fault party’s insurance company, which includes its customer’s deductible.
It is currently a relatively manual, time-consuming process often requiring physical cheques to be mailed on a claim-by-claim basis between insurers, according to Mike Fields, Innovation Executive, State Farm.
“In 2018 alone, the total amount of dollars demanded and issued through the subrogation process was over $9.6 billion for all insurance carriers. You can imagine the time and resources required to complete these transactions,” he comments.
“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 began working together in early 2018 and plan to continue testing to determine if the blockchain solution can be a viable product for industry adoption.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.