State Farm and USAA have announced that they are currently testing a blockchain solution designed to speed up the auto claims subrogation process, CollisionWeek reports. The announcement was made during the 2019 Dig in Conference.
The joint project is an attempt to address one of the slower aspects of the insurance claims process. As CollisionWeek notes:
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.
The current system used by insurers is time-consuming, since the process is typically managed manually and often involves mailing checks from one insurer to another. State Farm Innovation Executive Mike Fields said that the current subrogation system is costly:
“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.”
USAA vice president of Innovation Ramon Lopez said that blockchain technology can offer “many potential benefits” for insurers, automating the manual subrogation process while providing permanent records of each transaction. He suggested it may even help reduce delays for deliver of customers’ deductible reimbursements.