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State Farm Looks To Expand Blockchain Use For Speedier Auto Claims

State Farm HQ building
State Farm and USAA have been testing blockchain for years.

State Farm says it plans to expand the use of a digital bookkeeping technology to speed up and streamline the auto claims process, after a successful trial run with USAA.

State Farm announced Tuesday that its blockchain partnership with USAA has exited testing and is now in full production. After a crash, sometimes an insurer owes another insurer money—part of an industry process called subrogation. Now, instead of swapping 75,000 paper checks every year, State Farm and USAA will exchange digital payments using blockchain.

“That allows our customers, in many cases, to secure their deductible more quickly than they would have in the past,” Schuyler Schupbach, vice president for property and casualty claims at State Farm, said on WGLT’s Sound Ideas.

Customers’ personal information will remain protected, Schupbach said. The use of blockchain—a distributed ledger technology most famously associated with bitcoin—will not add any new exposure.

“As we work through this process with USAA, this isn’t about sharing private, personal information between our two companies. It’s about how we effectively calculate and exchange the moneys owed related to the subrogation process,” he said.

Bloomington-based State Farm and USAA have been testing blockchain for years. Schupbach said State Farm, the largest U.S. auto insurer, hopes to begin blockchain partnerships with other insurers this year.

In a future where more and more of the subrogation process is handled through blockchain, does that mean State Farm will need fewer people to do that work?

“This is a relatively small step in the overall subrogation process. But we position this technology solution just as we do all of our innovative technology solutions,” Schupbach said. “Our goal continues to be on, how do we identify better ways of handling transactional work that doesn’t really require a lot of employee judgment? That provides our employees the ability to focus their time and attention on higher-valued work that really does directly benefit the customer.”

State Farm first announced its USAA blockchain partnership in 2019.

“Carrier-to-carrier claims payments will be almost completely automated in the future, saving time and money,” Sean Burgess, USAA chief claims officer, said in a statement. “Utilizing blockchain technology helps us securely improve and automate a manual process and ultimately gets money back to our members and customers faster.”

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Ryan Denham is the digital content director for WGLT.