United States insurance giant State Farm has collaborated with military-affiliated bank United Services Automobile Association (USAA) in order to test a blockchain-based subrogation solution with real claims data.
As per the announcement made by State Farm in an official press release on May 30, that the blockchain technology will be employed by both the insurance titans to automate and streamline the subrogation process in insurance claims.
The platform will purportedly enable them to automatically compile total payments, net the balance, and conduct a regularly scheduled payment between insurers. As per the release, State Farm is testing the blockchain solution with real claims data.
State Farm elaborates that subrogation is when two insurance companies agree over a certain amount of financial compensation, that will be awarded to the claimant’s representative by the at-fault individual’s representative. Usually, this is the final phase of the claim process. Mike Fields, the innovation executive at the State Farm noted the large scale of subrogation claims, explaining why the blockchain would be of aid:
“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.”
In December, the company’s website states that they have had processed 38,300 claims daily and holds approximately 519,000 accounts in mutual funds.
Image source – Stock Photo Secrets