State Farm, USAA to Pay Each Other Insurance Claims on Blockchain by 2020

U.S. insurance giants State Farm and USAA have entered advanced testing of a blockchain to automate the time-consuming and paper-heavy processing of automobile claims.

State Farm and USAA began working on the joint platform in early 2018.

State Farm disclosed the project was in early trials.

This is typically the last phase of the claims process when one insurance company recovers claim costs it paid to its customer for damages from the at-fault party's insurance company.

Subrogation payments totaled about $9.6 billion across all U.S insurance carriers last year, according to Mike Fields, an innovation executive at State Farm.

"I think innovation is hard already, but the ability for two very large companies like State Farm and USAA to partner their innovation teams to bring something to light is worth mentioning as well."

Quorum is a somewhat surprising choice of platform for State Farm and USAA. That's because both are members of the RiskBlock Alliance, the insurance blockchain consortium, which last year announced.

The re-insurance blockchain consortium B3i has also opted for Corda, suggesting an interoperability play across the insurance industry.

According to State Farm's Field, Quorum's focus on data privacy was a factor in the decision.

State Farm and USAA did look at Corda, Field said, adding that it too would have been a suitable platform.