RiskBlock Alliance™ Announces Plan to Launch Blockchain-based Subrogation Tool
The Institutes RiskBlock Alliance™, a blockchain consortium for the risk management and insurance industry, announced today it is moving past the minimal viable product stage on its blockchain-based subrogation tool and is developing a production-ready subrogation application for insurers. The new tool, anticipated to launch in summer 2018, will use blockchain-enabled smart contract technology to facilitate the netting of consortium members’ payments, thereby reducing manual processes and improving efficiencies in the payment and accounting aspects of claims processing.
“Subrogation is a notable example of how claim settlement can be improved with blockchain adoption,” said Christopher G. McDaniel, president of The Institutes RiskBlock Alliance. “Subrogation is the process used to exchange money between insurers to settle a claim. This process is time-consuming and largely manual. A shared ledger, like the one used within the RiskBlock Alliance, can facilitate the netting of payments among consortium members, eliminate manual processes, and speed up the entire process. This can eliminate or reduce administrative costs, especially if the netting principles are automated through smart contracts.”
Subrogation was the focus of one of the RiskBlock Alliance’s first use cases. Many insurers supported it as a logical starting point for use of distributed ledger technology as it involves a B2B monetary exchange. The RiskBlock Alliance is partnering with other industry providers in the subrogation space to integrate their capabilities into the blockchain solution.
“We are seeing really exciting innovation occurring in the claims space, partly due to the rapid advancement of technologies such as distributed ledgers,” said Bennett Neale, enterprise architect at Farmers Insurance® and a RiskBlock Alliance subrogation working group lead. “Subrogation is a key focus area with the opportunity for immediate impact if capabilities for real-time, inter-carrier settlement are added via distributed ledgers, enabling us to provide a better experience for our customers.”
The subrogation tool is just one solution in the RiskBlock Alliance’s suite of applications poised to use the blockchain to address issues across the industry. Other solutions focus on proof-of -insurance verification, first notice of loss data sharing, and parametric insurance. Each use case has an associated working group of individuals from various member companies. Members prioritize and determine which blockchain use cases to pursue based on strategic analysis and member agreement.
“Blockchain will undoubtedly play a role in the future of insurance, and likely a disruptive one,” said John Pileggi, assistant controller II at Liberty Mutual Insurance and a RiskBlock Alliance subrogation working group lead. “Liberty Mutual is pleased, through its membership in The RiskBlock Alliance, to be one of the companies collaborating with our peers in a safe environment to build a blockchain-based subrogation application. We seek to influence the impact blockchain has on insurance and we are committed to developing leading edge technologies and applications in partnerships with groups like RiskBlock.”