Dustin Helland is blockchain product strategy and implementation manager at State Farm. In this exciting episode he talks to us about the auto claims subrogation implementation on blockchain by State Farm and USAA. What is interesting about this implementation is that it was done on a Quorum blockchain, which is a first on Insureblocks.

 

What is blockchain?

Blockchain is a distributed ledger, which enables members of a business network to execute transactions in a peer to peer fashion.

Distributed ledger technology (DLT) essentially means that each of the network participants has a copy of the shared information. And by leveraging some complicated mathematical algorithms, the blockchain technology ensures that each of the participants can trust that the copy they have, or have access to, is the same as all the others.

What this means is that when each of the participants can trust the information that they have, it allows them to perform business transactions in a peer to peer fashion. Rather than depending upon a third party or intermediary for validating that the information is actually correct.

 

Who is State Farm?

State Farm was founded in 1922 by retired farmer and insurance salesman George Jacob "G.J." Mecherle. State Farm now insures more cars and homes than any other insurer in the United States while also providing a few other products such as life insurance, ifnanical services and a litany of others. As a mutual company, State Farms is focused on their policyholders and is currently ranked number 36 on the Fortune 500 list of largest companies.

 

State Farm’s blockchain journey

State Farm’s blockchain journey started in late 2016 when Bitcoin started to get on the attention radar of financial institutions and other large enterprises.

State Farm established a group in their labs department to explore and priorities blockchain opportunities. The team initially focused on working across the multiple business lines such as the claims department, underwriting and financial services. The objective was to educate them on the capabilities of the technology and identify and evaluate possible blockchain use cases that State Farm thought could be of value. In the spirit of learning by doing, they aligned a few of the identified business opportunities with some development teams to create early prototypes.

Since then their work has evolved towards a focus on product delivery and realisation of business value. The current flagship project is the net subrogation product that they have built in collaboration with USAA (United Services Automobile Association).

 

Large consortium approach or co-founder one for blockchain?

State Farm rapidly realised that blockchain is a team sport. For many of the blockchain use cases, to realise the potential of that use case requires a certain level of market adoption. The value is typically in the network.

There are a couple of emerging patterns for driving blockchain solutions from concept through development and industry adoption. State Farm has invested and participated in each to really understand them. One of those models is the co-founder based approach that typically involves a small number of firms or companies that focus on developing a single product or use case. They build it out, prove it out and invite others to join in.

The other model is the consortium approach such as RiskStream Collaborative (previously known as the RiskBlock...