USAA and State Farm Work Together to Improve Claims Process with Blockchain

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The current environment has led to an increased demand for digital acceleration and automated processes, and companies are working together to keep pace with rising customer expectations by innovating and building for the future. Today, USAA and State Farm are announcing that auto subrogation claims settled between the two companies are being processed using blockchain technology.

 

The blockchain solution is the first of its kind between two leaders in the insurance industry. The news follows the 2019 announcement that the companies were testing a blockchain solution to automate manual, time-consuming and paper-heavy subrogation, the process used by insurers to exchange money to settle claims between their insureds. Since then, the solution has been extensively tested using historical data and is now in full production.

 

“Carrier-to-carrier claims payments will be almost completely automated in the future, saving time and money,” said Sean Burgess, USAA Chief Claims Officer. “Utilizing blockchain technology helps us securely improve and automate a manual process and ultimately gets money back to our members and customers faster.”

 

“We are always looking at ways we can operate more efficiently to benefit our customers,” said Robert Yi, Chief Claims Officer at State Farm. “This blockchain solution will assist in speeding up subrogation recovery, resulting in an earlier return of the customer’s deductible.”

 

Subrogation is typically the last part of an insurance claims process, when one insurance company recovers claim costs it paid to its customer for damages from the at-fault insurance company, which often includes its customer’s deductible.

 

USAA and State Farm exchange about 75,000 checks each year. After a brief production evaluation period, the companies will seek to onboard more carriers throughout 2021.

 

What is Blockchain?

Blockchain is a distributed ledger technology that can be used to manage transactions and store information using cryptography (i.e., mathematical algorithms and secret keys that encrypt data), peer-to-peer networking and data storage. This type of digital technology can create value for customers in ways that they wouldn’t expect from their insurance company. Subrogation is one example of where blockchain technology has the potential to reduce expenses while making processes more efficient and secure. No sensitive personal information is shared using this blockchain solution.

 

What is Subrogation?

Subrogation describes the right held by most insurance carriers to legally pursue a third party that caused a loss to an insured. Information about the claim is collected and the two insurance companies negotiate the claim amount. If an agreement is reached, the at-fault insurer submits payment to the other insurer on an individual claim basis.

 

Disclosures

Auto insurance provided by United Services Automobile Association and its property and casualty affiliates, San Antonio, Tx.

 

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