Insurance Giant State Farm Now Enters Blockchain
Multi-billion dollar insurance giant State Farm has entered the realm of blockchain with the testing of blockchain solutions for auto insurance claims subrogation (the process where the at-fault customer’s insurer pays the other insurer), according to a report by LedgerInsights.
Per the report, State Farm partnered with USAA, another insurance giant, and they have been working together on this blockchain project since early 2018. The project is still in the testing phase but has progressed to using real claims data, and may be completed by the end of 2019 or early 2020.
Using Blockchain To Improve the Subrogation Process
Insurers are constantly overwhelmed with hundreds of claims to settle, each of which involves manual reconciliation on a claim-by-claim basis. State Farm and USAA hope to speed up and improve this process by using blockchain technology to settle all claims in a specified time period.
Using blockchain technology to settle all claims will be far more efficient, and will result in cost savings for the insurer. This might in turn carry over to the consumer in the form of reduced premiums and deductibles.
The blockchain solution is being built on the private enterprise version of Ethereum, JP Morgan’s Quorum, and therefore will not be interoperable and used on a grand scale due to its private nature. However, State Farm and USAA are members of the RiskStream Collaboration, which has 39 insurer members.
Therefore, if the company’s blockchain subrogation solution is a success, it could be rolled out and adopted by other insurance giants.
As stated by a spokesperson for State Farm:
“It is still early in the testing phase, so we don’t know who we will open the blockchain up to in the future. We may offer it to other insurance companies that are involved in the RiskBlock [RiskStream] consortium.”
Do you think these insurers are going the right route by using closed blockchain technology? Or should they use Ethereum’s public blockchain with Nightfall’s privacy capabilities? Let us know what you think in the comment section below.
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