When an accident occurs that involves more than one party and the parties are represented by either of the companies, the liable company will use a blockchain solution to settle the inter-company payment in a process called subrogation.
“Today, subrogation is a manual, time-consuming process often requiring physical checks to be mailed on a claim-by-claim basis between insurers,” said Mike Fields, Innovation Executive at State Farm. “In 2018 alone, the total amount of dollars issued through the subrogation process was over $9.6 billion.”
According to Forkast News, the claims amount to billions of dollars a year, an immense volume of transactions that blockchain technology can settle in minutes. The advent of stablecoins and clearer crypto regulations have renewed interest from traditional institutions.
USAA and State Farm believe that the new system will save time and costs for both companies.
“The blockchain solution we are working on has many potential benefits,” said Ramon Lopez, Vice President of Innovation, 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.”
State Farm made its blockchain project public last year, but USAA was not included in the announcement. Now, the partnership has been made official.
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