State Farm, USAA Test Blockchain Solution For Auto Claims Subrogation

Blockchain, Innovation, News | May 31, 2019 By:

Insurance giant State Farm and military-focused banking and insurance firm USAA are testing how blockchain technology can improve the speed of the auto claims subrogation process.

State Farm, the largest property and casualty insurance provider in the United States, first announced in December 2018 that it was testing a blockchain solution that could speed up the subrogation process for auto claims. Subrogation refers to the process an insurance company uses to seek reimbursement from the responsible party for a claim that had already been paid for a covered loss. Subrogation is important because any monies recovered through the subrogation process go directly to the insurance company’s bottom line. However, subrogation is a relatively manual, time-consuming process often requiring physical checks to be mailed on a claim-by-claim basis between insurers.

In its latest announcement, State Farm said that it started working with USAA in early 2018 and that they are now to test a blockchain subrogation solution using real claims data. According to State Farm, the solution can be used to gain efficiencies in the subrogation process by securely and automatically 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,” said 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.”

State Farm claims that the blockchain subrogation solution is the first of its kind between two major leaders in the insurance industry. The two companies plan to continue testing to determine if the solution can be a viable product for industry adoption.