As per recent reports, two US-based insurance majors, namely State Farm and the United Services Automobile Association (USAA) are trying and testing out a blockchain solution to introduce automation into the arduous, labour-intensive task of disbursing automobile insurance claims.
The new joint blockchain platform allows the companies to carry out scheduled payments, calculate total payments to move made and bet the cash balance. The existing system being used by the companies is a subrogation system, which will now be replaced by a ledger shared by the two insurance companies. The ledger has been developed by Quorum.
State Farm explained that the subrogation system comes at the last stage of the claims process. This comes after the insurance firms have decided on a certain amount of monetary compensation to be paid and the claim amount is paid to the appealing client from the offending party’s insurance company.
Mike Fields, the Innovation Executive of State Farm stated that in 2018, the total amount wanted and delivered via the subrogation process for all the insurance companies was more than 9 billion dollars ($9.6 billion). This amount naturally required quite a bit of time and money to disburse such a lot of payments. To make this process easier, the new joint blockchain platform will sum up the balance of payments and ensure the regular disbursement of separate payments among the insurance companies.
Earlier at the end of last year, State Farm had announced that it was working on the subrogation project by itself. However, more recently, it was announced that the State Farm was working with the United Services Automobile Association for the successful conduction and implementation of the subrogation project.
Blockchain has long been used to make insurance payments simpler and this new initiative just marks a new innovative spin on the same.
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