By A U.S insurance group known as State Farm is currently testing blockchain technology as part of a platform for aiding in insurance subrogation.
State Farm announced this past Monday, that they are currently trialing a blockchain solution in order to streamline manual processes of subrogation.
In a nutshell, subrogation is a company’s legal right to pursue damages incurred from a third-party who is responsible for causing loss to the party which is insured. The State Farm trial’s purpose is to determine whether a blockchain solution is a “viable product for insurance industry adoption,” according to an official press statement. State Farm is quite the notable firm for expressing interest in adopting blockchain as they ranked 36 on the Fortune 500 list this year.
State Farm explained that during a claim for an auto accident, two insurance firms would work out the claim amount. The insurer representing the party-at-fault for damages would pay the insurer for the other party involved.
Up to a whopping $11 billion in claims were transferred in subrogation in 2017, claimed a State Farm spokesperson in an email with $750 million pertaining to insurance claims of a private-passenger nature.
State Farm Innovation Executive Mike Fields explained in a statement:
“Today, subrogation is a relatively manual, time-consuming process often requiring physical checks to be mailed on a claim-by-claim basis between insurers.” In contrast to this, by implementing a blockchain platform, a number of benefits would become available.
“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.”
In another email, a State Farm spokesperson went on to add that blockchain solutions could reduce the risks of processing errors occurring with claims due to the nature of the platform’s validation processes. It would also aid in decreasing the number of paper checks which currently plaque insurers sending them to and forth to each other.
Dustin Helland, another innovation manager added that the State Farm team were exploring the immutability of blockchain tecbology as another benefit for the insurance sector.
State Farm’s test will occur during the first half of 2019 in conjunction with existing processes for subrogation. Furthermore, Helland explained that:
“the results of the test, along with other factors, will be input for a decision on whether or not to launch the solution into full production adoption.”
This is big news for blockchain technology as it’s currently being implemented in many other industries in efforts to streamline processes. Could the insurance industry be the next big sector to grant the technology widespread adoption? Let us know your thoughts by commenting below.
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