United States insurance giant State Farm and military-affiliated bank United Services Automobile Association (USAA) are testing a blockchain-based subrogation solution with real claims data. State Farm announced the development in an official press release on May 30.
The two insurance titans are using blockchain technology to automate and streamline the subrogation process in insurance claims.
The platform purportedly allows them to automatically compile total payments, net the balance, and conduct a regularly scheduled payment between insurers. State Farm states that the blockchain solution is being tested with real claims data.
State Farm explains that subrogation occurs when two insurance companies agree on some amount of financial compensation that will be awarded to the claimant's representative by the at-fault individual’s representative. This is usually the final phase of the claim process, it notes.
State Farm Innovation Executive Mike Fields commented on the large scale of subrogation claims, and alluded to why streamlining the process would be desirable:
“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.”
According to the company’s website in December, the insurance agency processes 38,300 claims daily and holds approximately 519,000 accounts in mutual funds.
As previously reported by Cointelegraph, State Farm announced that it was working on the subrogation project at the end of 2018. Per today’s announcement, State Farm and USAA have been jointly working on the project since early 2018.