A research team funded by insurance carriers will soon launch a system that uses block chain technology to allow claims adjusters from multiple insurers to share access to a single first notice of loss.
The RiskStream Collaborative said that it has completed production testing of an application called Canopy that will create a single FNOL that can be shared by all the parties involved in a claim. The collaborative said in a press release that it expects insurers to begin using the system in “the next several months.”
President Chris McDaniel said Canopy, coupled with a proof of insurance verification system that the collaborative launched previously, will save claims adjusters from countless emails and phone calls.
Now, all carriers on risk for a claim must create their own first notice of loss. Canopy allows claims adjusters to separately fill out all of the data fields required to create an FNOL together that can’t be changed without permission of all parties.
“Insurers have a problem with trusting each other,” McDaniel said during an interview. “Because it’s impossible for anyone to play hanky-panky with it because of block chain, it becomes a trusted environment.”
The new tool has potential for widespread use. McDaniel said insurance carriers that write 65% of the U.S. personal auto market are members of the RiskStram Collaborative, which means they invested in the research. Carrier members include State Farm, GEICO, Chubb, Nationwide, Munich Re, USAA, Farmers, Liberty Mutual, Travelers and Erie Insurance. Chubb and Marsh participated in production testing.
RiskStream is a nonprofit organization affiliated with The Institutes, which provides research and educational services to the insurance industry.
McDaniel said RiskStream research determined that claims adjusters participate in an average of 37 phone calls to collect FNOL data. Those calls can last as long as 30 minutes.
“This siloed information collection process leads to information gaps and a cumbersome and clunky back and forth between the carriers,” RiskStream said.
RiskStream said Canopy can save insurers $14.4 million in claims intake costs and $28.8 million in data sharing each year, a total annual savings of $43 million When coupled with the proof of insurance system, total savings can reach $99 million to $277 million, the collaborative said.
Blockchain is the same technology that led to the creation of bitcoin by solving the issue of doublespending. All changes to data are tracked and cannot be made without notifying other parties that have access to the data. The Canopy system allows only parties to each claim access to the FNOL record and prevents members from use the “metadata” that is collected to gain a competitive advantage, according to a report by the RiskStream Collaborative.
When a policyholder reports a claim, the adjuster enters data into the FNOL and notifies any other carriers involved. The adjuster for the other driver’s carrier can access the claim data and enter more information if it is available.
McDaniel said if someone goofs by entering an incorrect tag number, for example, the Canopy program will flag that entry if it receives a different tag number form another source. But he said the system also has built-in rules to ensure time isn’t wasted needlessly reconciling data. The system will default to the tag number entered by the car’s owner and assume the other number entered is in error. Similar rules exist to select default policy numbers and other data.
McDaniel said the Canopy system is the second phase of an effort that will eventually automate all eight modules of the claims process. With proof of insurance and first notice of loss built out, RiskStream still must tackle claim files, salvage, subrogation, fraud, medical claims management, regulatory reporting and customer satisfaction.
McDaniel said Canopy is “the first draft in the rest of the claims system.”
“We ultimately want to have the whole claims process automated end-to-end,” he said.
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