U.S.-based insurance company State Farm announced today that the company will be testing a blockchain-based solution to speed up and improve the subrogation process for auto claims.
For those that aren’t aware of State Farm, State Farm is a large group of insurance and financial services firms that provide auto insurance in the U.S.
As of today, State Farm is looking to test a blockchain-based solution to speed up the auto claim process in the insurance industry.
The main focus is the subrogation process. Subrogation is a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured, and is usually the last part of an insurance claims process.
The main goals of this test:
- Reduce the time it takes to complete the subrogation process
- Reduce data entry needs
- Remove middleman and manual process involved.
According to Mike Fields, State Farm’s innovation executive, “subrogation is a relatively manual, time-consuming process often requiring physical checks to be mailed on a claim-by-claim basis between insurers.” “Using blockchain 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.”
Insurance and blockchain
Insurance companies all around the world already started the process to integrate blockchain in their claims process with the same goals. Last month, Japanese insurance company Sompo partnered with pan-African digital payment platform BTC Africa, also known as BitPesa.
In September, major insurance firm the People’s Insurance Company of China (PICC) partnered with blockchain platform VeChain and global quality assurance and risk management company DNV GL to make their business more time and cost efficient.
Other use cases include fraud prevention and data entry automation.