State Farm takes advantage of the blockchain tool to streamline insurance claims
American insurance company State Farm decided to test a blockchain technology that will become a characteristic feature of the newly create platform to deal with insurance claims. Insurance subrogation has been performed manually for many years, but the company decided to devote this responsible task to technology and make a trial of a blockchain tool. […]
American insurance company State Farm decided to test a blockchain technology that will become a characteristic feature of the newly create platform to deal with insurance claims.
Insurance subrogation has been performed manually for many years, but the company decided to devote this responsible task to technology and make a trial of a blockchain tool. Subrogation is a legal right according to which from a third party that caused some loss to the insured individual can be pursued damages by an insurance company.
The press release made on Monday explains that this trial is required to determine if it is worth adopting the following blockchain solution in the insurance industry. The company is one of the first insurance agencies trying to implement blockchain solutions and takes the 36th place on the list Fortune 500 this year.
The company explanation says that an automatic claim will make 2 companies to cooperate and evaluate the claim amount. The insurer who is guilty of the loss must pay another insurer a certain sum according to the claim.
The transference sum of subrogation claims last year has reached $11 billion. This information was provided by the company spokesperson in the email, telling that $750 million have been taken by private passenger claims.
According to Mike Fields, subrogation has always been a manually performed process when every insurance company had to make physical checks by claim of another company. Blockchain solution will help to achieve some positive goals in this task. The biggest advantages it can bring about is an automation of the process that used to be manual, improving its security, creation of the records of all permanent transactions to be easily verified. Moreover, thanks to blockchain, insured clients will wait for a shorter period of time for their deductible reimbursement. It can also prevent possible errors in the claim processing as well as minimize the quantity of paper checks made by each of the insurers.
According to Dustin Helland, innovation manager of the company, one more advantage they wish to gain from the blockchain tool is its immutability.
The company is planning to continue the trial to the middle of 2019 following the current subrogation processes. Help and admitted that both results and other factors will be considered by the company staff and only then a decision of launching the tool or not will be made.