US state insurance giant State Farm and USAA test blockchain insurance claims platform

According to Coindesk's May 30 report, US insurance giants State Farm and USAA are using real-world data to conduct blockchain advanced testing based on the Quorum platform to reduce the heavy and time-consuming paperwork in auto insurance claims. This simplifies the claims process and increases the level of automation.


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In early 2018, State Farm and USAA began running on the joint platform (not yet named). The former had revealed that an early test was conducted in December, but USAA did not say it at the time.

The two companies will replace the existing subrogation system with a shared ledger. Subrogation usually refers to the final stage of the claim process, that is, an insurance company pays the insured a loss of the accident and then recovers the claim fee from the automobile accident insurance company. To put it simply, if Xiao Zhang smashes the old Liu's car, Lao Liu's insurance company will pay him for repairs, and then bill the small Zhang's insurance company.

Currently, insurers usually need to mail a paper check to complete the payment by way of a claim. Mike Fields, head of state farm innovation, said that last year all American insurance companies paid a total of about $9.6 billion.

To streamline this process, the new blockchain platform can automatically compile total payments, deduct balances (thousands per month), and make regular payments between insurance companies.

Fields said:

Currently, there are only two companies on the distributed ledger, but we can get more auto insurance companies involved. The blockchain is able to track each individual case and get it at any time interval, weekly, monthly, etc.

Perhaps cryptocurrency practitioners would consider the project not highly innovative, but USAA's vice president of innovation, Ramon Lopez, stressed the challenge of working with two large competitors and added:

Innovation itself is already very difficult. Large companies like State Farm and USAA can collaborate and come up with new ideas that are also valuable.

Reasons for choosing Quorum

State Farm and USAA use the Quorum platform, which is a bit surprising. Quorum is an enterprise-based blockchain solution based on Ethereum created by JPMorgan Chase.

Both companies are members of the Insurance Blockchain Alliance RiskBlock, and last year the Alliance announced that R3's Corda platform would be the first choice for its distributed ledger technology (DLT). In addition, the reinsurance blockchain alliance B3i also chose Corda. This shows the interoperability of the entire insurance industry.

Fields said that Quorum's focus on data privacy is a factor in its decision.

Initially, we analyzed all blockchain platforms. However, we want a platform that allows private networks to invite others to join, with strong privacy and security.

Field also added that State Farm and USAA did study Corda. It is also a suitable platform with many advantages. Both State Farm and USAA are actively involved in the use cases established by RiskBlock, but Field suggests that it is necessary to go out and innovate.