State Farm, one of industries biggest insurance companies, has announced the use of a blockchain based service which will aid in the process of subrogation which occurs due to the substitution of one or more parties in a insurance claim.
Subrogation is currently a very labor intensive process requiring considerable time and money when done using traditional methods. With slow communication between the invoked parties and need to accrue evidence from the 2 firms who are part of a procedure, state farm has looked to the blockchain to help make the process efficient.
Subrogation is legally known when one entity is substituted for another in the insurance claims process. This substitution also includes the financial rights and obligations agreed with the original party involved in the insurance claim. In terms of insurance companies this process is usually carried out after a claim has successfully been made by a client. Once a claim has been made, a insurance company can also file a claim against the party which caused damage/harm. This process currently requires 2 insurers to work together to determine a claim amount which is one of the biggest tome consuming process during a subrogation claim.
“Today, subrogation is a relatively manual, time-consuming process often requiring physical checks to be mailed on a claim-by-claim basis between insurers {…] 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.”
Mike Fields – State Farm innovation executive
To conclude, State Farm will be using a blockchain based resolution platform to accommodate the process of subrogation. State Farm remains one of America’s leading insurance providers generating over $2.2 Billion in net income last year employing well over 70000 people.
