Automated Subrogation & Recovery

Manual subrogation is a paper chase, often taking 6-18 months to resolve. Blockchain automates claim matching, liability verification, and payment routing with smart contracts. This reduces the recovery lifecycle to days or weeks, accelerating cash flow and reducing administrative drag.

• Example: A multi-car accident claim involving three insurers can be settled automatically once police and repair data is immutably logged, triggering proportional payments.

A shared, immutable ledger provides a single source of truth for all parties. Disputes over claim facts, coverage, or payment history are drastically reduced because every action and data point is time-stamped and verifiable. This cuts legal fees, audit costs, and the manpower spent on back-and-forth communications.

• Result: Resources shift from dispute resolution to proactive risk management and customer service.

Your automated recovery platform becomes a new revenue stream. You can offer "Recovery-as-a-Service" to smaller carriers or self-insured entities who lack your scale. Charge a transaction fee or percentage of recovered funds for processing their subrogation claims through your efficient, trusted network.

• Business Model: Transition a cost center into a profit center by monetizing your infrastructure.

Every transaction is cryptographically sealed into an immutable audit trail. This provides automatic proof of compliance with regulations like IFRS 17 or state insurance codes. Auditors can be granted read-only access, turning a weeks-long manual process into a real-time verification, saving hundreds of hours and reducing compliance risk.

• Key Benefit: Demonstrable governance that satisfies regulators and internal controls.

Justify the investment with clear metrics. A typical implementation targets:

• ~70% reduction in manual processing costs for subrogation.
• ~60% faster recovery times, improving working capital.
• Near-elimination of reconciliation errors and associated rework.
• New revenue from platform fees, creating a direct ROI pathway.

A consortium of insurers and shippers used a blockchain to automate claims for damaged goods. IoT sensor data (humidity, impact) was written directly to the chain upon container seal breach. Upon delivery, a smart contract automatically assessed liability between the carrier, port, and insurer, triggering instant subrogation payments. This reduced claim resolution from 4 months to 48 hours.

Manual, paper-based processes dominate. Claim files are siloed across insurers, repair shops, and legal teams. Evidence sharing relies on fax and email, creating a 60-90 day lag. Key pain points include:

• Duplicate payments due to poor data visibility.
• High administrative costs from manual reconciliation.
• Lost recovery opportunities when statutes of limitations expire.

A shared, permissioned ledger creates a single source of truth for the subrogation lifecycle. Every event—from the initial accident report to the final recovery payment—is timestamped and cryptographically sealed. This enables:

• Automated liability assignment using smart contract logic.
• Real-time audit trails that reduce disputes and fraud.
• Seamless data sharing between carriers without compromising privacy.

Start with a focused proof-of-concept on a high-friction, multi-party process. Key steps:

1. Partner Selection: Identify 2-3 other carriers or service providers.
2. Process Mapping: Isolate the subrogation workflow for a specific line (e.g., auto liability).
3. Tech Stack: Leverage enterprise-grade platforms like Hyperledger Fabric or Corda for privacy and compliance.
4. Pilot & Scale: Run a 6-month pilot, measure ROI, and expand to other lines of business.

The trusted data layer unlocks innovative services. Examples include:

• Parametric Recovery Triggers: Smart contracts auto-execute payments based on IoT sensor data (e.g., flight delays, shipping conditions).
• Fractionalized Reinsurance: Tokenize recovery portfolios to attract new capital.
• Enhanced Customer Experience: Provide policyholders with a transparent, real-time view of their claim and recovery status.

The traditional subrogation process is plagued by manual data entry, mismatched records, and disputes over liability and payment amounts. A shared, immutable ledger creates a single source of truth for all parties—insurers, third-party administrators, and legal teams. Smart contracts automatically validate claims data against policy terms and accident reports, reducing reconciliation time by over 70% and virtually eliminating billing disputes. Example: A European motor insurer consortium cut dispute resolution from 90 days to under 10.

Manual payment processing and chasing recoveries create significant administrative drag and cash flow delays. Programmable smart contracts can be triggered by verified liability decisions, automatically initiating and settling payments between entities. This ensures faster recovery cycles and improves capital efficiency. For a mid-sized insurer, automating just 30% of subrogation cases can free up $5-10M in working capital annually by accelerating cash inflows.

Regulators and internal auditors demand transparent records of every recovery transaction and decision. Blockchain provides an indelible, timestamped audit trail for every step: from initial claim, liability assessment, communication, to final settlement. This immutable log simplifies compliance reporting for regulations like IFRS 17 and reduces audit preparation costs. Firms can demonstrate provable compliance, turning a cost center into a demonstrable control advantage.

In logistics, damage claims across multiple handlers (shipper, carrier, port) are complex to attribute. A blockchain network with IoT sensor data recorded on-chain (e.g., temperature, shock) provides irrefutable proof of condition and custody timeline. Smart contracts automate liability assignment and subrogation claims between parties, reducing claim processing time from months to days. Maersk's TradeLens (with IBM) explored this for documentation, creating a foundation for such automated recovery systems.

Investment is justified by hard cost savings and recovered revenue:

• Direct Cost Reduction: Cut administrative FTEs dedicated to manual recovery by 50-60%.
• Improved Recovery Rate: Faster, more accurate claims can increase net recovery amounts by 15-25%.
• Reduced Legal Spend: Fewer disputes mean lower external legal fees.
• Capital Efficiency: Accelerated cash flow from recoveries improves working capital metrics. A typical payback period can be under 18 months based on operational savings alone.