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Distributed Subrogation Ledger

Overview

Manual claim subrogation process is always a huge challenge for non-life carriers, as it usually requires a significant amount of involvement from insurers and third-party companies. Introducing blockchain here could provide an efficient automation mechanism for insurers to manage the subrogation process.

Insurers around the globe face the challenge of excessive subrogation costs and reducing claims recoverable. Though insurers use well-defined processes and technology to reduce the overall costs, they struggle due to following challenges:

  • Multiple iterations of data reconciliation among claiming insurer
  • High administration cost of subrogation due to the involvement of multiple parties
  • Delay in recovery processing
  • Periodic settlement of subrogation claims using bank as an intermediary
  • Lack of single view of information connecting multiple participants

A decentralized blockchain solution can help insurers reduce subrogation costs and accelerate recovery time

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Distributed Subrogation Ledger Process flow

Distributed Subrogation Ledger Process flow
  • Claiming insurer identifies potential subrogation claim from various sources like police report, adjuster, and court report
  • Claiming insurer places a subrogation claim on blockchain and automated notification is sent to the insurer of party at fault
  • Negotiations happen between the claiming insurer and insurer of party at fault for the recovery amount
  • Insurer of party at fault pays the agreed negotiated subrogation amount
  • Claiming insurer receives the amount and pays refund of deductible to the claiming insured
  • Claiming insurer transfers salvage recoverable (if any) to the insurer of party at fault
  • Claiming insurer closes subrogation claim

Distributed Subrogation Ledger helps you achieve:

  • Common ledger reconciliation between claiming insurer and insurer of party at fault
  • Reduction of administration costs due to common ledger acting as single source of truth
  • Accelerated subrogation recovery
  • Improved transparency between insurers, regulators, and customers
Distributed Subrogation Ledger helps you achieve

Challenges & Solutions

Blockchain acts as shared ledger across multiple participants, helping in securing and sharing information. Additionally, Smart Contracts automate the business process on blockchain, minimizing administrative overhead, resulting in increased coverage of subrogation claims with a lower ROI.

Distributed ledger stored on blockchain enables instantaneous and common reconciliation between claiming insurer and insurer of party at fault, reducing potential reconciliation errors and monetary loss.

Common distributed ledger saves reconciliation time between claiming insurer and insurer of party at fault. In addition, Smart Contracts enable automated refund of the deductible to the insured and transfer of salvage recoverable to the insurer of party at fault, resulting in faster recovery of subrogation claims.