United States financial services and insurance company, State Farm has announced that they are venturing into blockchain as an alternative way of speeding up the process of subrogation. In a press release, the company announced that they are working on the possibility of adopting a distributed ledger technology. The move aims at improving the claims subrogation process, as well as ensuring timely delivery of services to their customers.
Testing Distributed Ledger Technology
However, the distributed ledger technology is still in the initial testing stage to assess its viability as an insurance product for their clients. According to State Farm?s innovation executive, Mike Fields, the company processes typically around 38,000 claims in a day through manual subrogation. Fields indicated that, the process takes a lot of time because of having to physically check claims between insurers which derail completion of transactions. The innovation executive says that the embracing of blockchain technology will benefit State Farm by automating the process. In keeping up with the technology, the company hopes to create permanent transactions records for all payments that are easily verifiable. The new developments are likely to decrease the period it takes for clients to get their reimbursements.
Insurance industry embracing blockchain technology
The adoption of blockchain technology is not happening only at State Farm, but equally, other insurance companies are joining the trend. In a feasibility study on DLT, State Farm indicated that they were teaming up with another insurance company to establish whether the distributed ledger technology can decrease the time taken in claim processing. Although this is the first time State Farm is venturing into blockchain technology, other companies have already adopted the technology. For instance, in November, Sompo collaborated with BitPesa in a move that is likely to see digitization of their global remittance services. In September, VeChain joined a partnership with the People’s Insurance Company of China as a measure to improve their practices such as KYC and issues to deal with fraud. Similarly, HurricanGuard has adopted the distributed ledger technology in a move aiming at automating the process of insurance payment during natural catastrophes.