Blockchain, a technology that manages transactions and stores information using networking and data storage, will process auto subrogation claims settled between USAA and State Farm. Subrogation, the last part of the insurance claims process, is the stage when one insurance company recovers claims costs it paid to its customer for damages from the at-fault insurance company.
James W., director of innovation at USAA, says blockchain technology allows us to automate a normally manual process and provides an “immutable” record – one that cannot be changed over time.
“Today, we settle claims with other carriers via physical checks, and the idea is to get rid of these costly checks and reduce the total number of payments,” explains James.
“You can imagine the manual processes and expenses that are a part of that process. And disputes require additional handling. With blockchain, we are creating a trusted source of record for those settled claims and paying them all together. Instead of USAA and State Farm sending a combined 75,000 checks each year, we’re sending one single digital payment each day.”
In the future, the team hopes to leverage blockchain technology to initiate other types of financial transactions between insurers as well as key partners. Snehal D., research engineer, says the team is working on multiple use-cases to significantly reduce the claims processing times, from the first notice of loss to subrogation.
“On average, it takes seven to 21 days to acquire and verify the factual data pertaining to a given claim, but with blockchain, the entire process could take between three to five days.” says Snehal. “It’s also extremely secure – the safety and privacy of our member data are also the key drivers of our solution design.”
Behind the scenes, our subrogation specialists are instrumental in getting claims resolved. USAA employee, Lisa D., says blockchain will help to improve our payment process.
“Blockchain allows us to settle and pay claims quicker, recover monies faster and reduce cycle time,” says Lisa, subrogation specialist who has been with USAA over 10 years.. “We’re all working hard to get this off the ground successfully because it is a first in the industry.”
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