USAA and State Farm are teaming up to test whether blockchain technology can automate a time-consuming, paper-heavy part of the claims process.
It’s the first project of its kind between two prominent insurance carriers, the companies claim.
Blockchain acts as a digital ledger, creating a list of transactions between organizations, storing different types of information and recording changes. Each organization has a copy, ensuring that they’re seeing the same information, said Dustin Helland, manager of State Farm RED Labs.
USAA and State Farm are applying the technology to subrogation, a step in the claims process where an insurance company seeks reimbursement for costs from the at-fault party’s carrier.
Countless subrogation transactions occur between insurers, Helland said, and agreeing on payment usually involves a paper trail, manual labor and entering information into various systems.
“We’ve built a system that automates that,” he said.
Blockchain can be used to verify the figure both companies have settled on and to run a net calculation for the transaction. It’s a cost- and time-saver for the insurers.
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The system is currently in the testing phase, and the companies aim to start using it for transactions by…