Blockchain

USAA, State Farm To Start Using Blockchain Payments

National insurers USAA and State Farm announced last week that they inked a deal to pay each other claims on the blockchain.

In a press release, State Farm and USAA said they are using real claims data to test how blockchain technology can quicken the auto-subrogation process. That’s usually the last phase of the insurance claims process, when one insurance company is paid out the claims from the accident. The two insurers are looking to see how they can gain efficiency by securely and automatically compiling all the subrogation payment amounts, netting the balance and facilitating a single payment on a regular basis between the two insurers. The insurance companies said that by using blockchain they can reduce the potential for errors, realize process improvements and improve the speed of transactions and payments. As it stands, the subrogation process is riddled with inefficiencies and delays in approvals — and thus payments.

“Today, subrogation is a relatively manual, time-consuming process often requiring physical checks to be mailed on a claim-by-claim basis between insurers,” Mike Fields, innovation executive at State Farm, said in the press release. “In 2018 alone, the total amount of dollars demanded and issued through the subrogation process was over $9.6 billion for all insurance carriers. You can imagine the time and resources required to complete these transactions.”

State Farm and USAA said the blockchain subrogation solution is the first of its kind between two large insurance players. They started working together in the early part of last year, they noted in the report.  “The blockchain solution we are working on has many potential benefits,” says Ramon Lopez, vice president of innovation at 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.”

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