How Distributed Ledger Enhances Carrier / Vendor Relationships
And How This Disrupts the Status Quo
A key factor to insurance carrier success is its relationships with the vendors within its business partner ecosystem. The partner ecosystem is comprised of complex processes that are intrinsically adaptive, and these interdependent working relationships rely heavily on efficiency and timeliness.
Efficient and timely partner collaboration is dependent upon multiple variables, based on the terms of the relationship and role within the network of participation. An error or bottleneck at any point in the process has a direct impact on all parties within the network, delaying progress and ultimately increasing time, effort and cost.
Managing insurance claims is illustrative of a complex collaborative ecosystem. An insurance carrier may partner with other insurers, reinsurers, TPAs and/or MGAs to process the claim, as well as investigative units, estimators and attorneys, among others. Subrogation firms and collection agencies also participate in a carrier’s partner ecosystem for claim recovery. Each carrier/partner relationship contains unique terms and conditions which define how the partners do business together. The fragmented nature of this complex network of partnerships contributes significantly to the time and cost of managing and recovering claims.
Distributed Ledger Architecture
Distributed Ledger Technology (DLT) is transformative, disruptive and some may say its entrance into the insurance market is long overdue. DLT brings together the entire partner ecosystem, securely connecting the value chain so actions, status, documents, notes, payments and other transactions are visible to all interested parties as they are executed. Real-time sharing of data, touchless claim payments, automated execution of tasks based on partner agreements—all of these benefits are made possible by DLT.
Transparency is a significant benefit of DLT. Since everyone involved in the business case has real-time access to all information related to the case, trust among partners is increased and interruptions in the process are easily and quickly identified for resolution. Synchronous updates are the DNA of this platform.
With DLT transactions and records are immutable and fully auditable. Full case history is available to all case participants and reports and audit trails can be produced within seconds.
Actions within a DLT platform are driven by smart contracts, capturing the terms and conditions of each partner agreement and performing tasks in accordance those terms. Machine Learning (ML) is utilized to automate the tasks, resulting in minimal or no human intervention throughout the processing of a case.
Raising the Bar on Efficiency
With DLT in place, case-related data is stored in a shared ledger distributed to all participants within the carrier/vendor collaboration. All parties have real-time access to the data based on their role and security profiles. This ensures that all participants have time-stamped copies of the data they require. This eliminates hundreds and thousands of hours of wait time and speeds up processing time exponentially, greatly benefitting all parties within the ecosystem.
Fostering Innovation and New Standards
The insurance industry is experiencing a disruption as new technologies are being rolled out at a faster pace than ever before in this space. DLT has already been rolled out by large carriers such as State Farm and USAA (Blockchain Solution Solves State Farm®, USAA Subrogation Challenge, State Farm, January 26, 2021). Speed-to-market and day-one benefits of new technologies such as DLT and Blockchain are capturing the interest of smaller carriers as well, as DLT is on track to become core to collaborative, interdependent insurance processes and how business partners work together. DLT enables the adoption of other innovative technologies which are fast becoming industry standards, such as Robotic Process Automation (RPA), Artificial Intelligence (AI) and Machine Learning (ML), all of which are elements of a comprehensive distributed ledger platform.
Gigaforce is proud to be the first and only provider of a blockchain-enabled distributed ledger platform to manage the subrogation process from end to end. It is exciting to see influential insurance carriers utilizing DLT for specific core functions, such as the netting solution, as it indicates the market is ripe for this next organic step of the digital journey. We are honored, and humbled to be the first in production to automate the entire process, from file import to settlement/recovery, and to demonstrate to the industry the value of DLT and blockchain. To learn more about the benefits Gigaforce users are realizing with regard to efficiency, time and cost, contact us at firstname.lastname@example.org.