Blockchain Smart Contracts for Faster Subrogation Payments
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Solution Overview
Problem
The process of settling subrogation payments is lengthy and complicated, involving multiple parties exchanging and verifying information, often relying on third-party intermediaries, which adds expense and complexity.
Innovation Solution
A blockchain-based system is used to manage and resolve subrogation claims, allowing parties to broadcast transactions and evidence on a shared ledger, with validating nodes applying consensus rules to validate and update the ledger, and smart contracts managing the claim process.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a traditional intermediary-based system is used to manage subrogation claims, then information verification and communication between parties can be achieved, but the process becomes lengthy, complicated, and expensive
Solution Approach 1:
The patent extracts the intermediary function from the traditional subrogation process and replaces it with a blockchain-based decentralized system. The blockchain network directly performs information verification and communication between insurers and third parties, eliminating the need for intermediaries and reducing claim resolution time while maintaining reliability through cryptographic verification
Solution Approach 2:
The patent introduces a blockchain network as a new intermediary that provides more efficient information verification and communication. The blockchain acts as a trusted mediator that enables direct interaction between insurers and third parties, replacing traditional intermediaries and reducing both time and cost while maintaining the necessary verification functions
2Loss of information
If traditional subrogation settlement processes are used, then parties can exchange and verify information, but third-party intermediaries add expense and complexity
Solution Approach 1:
The blockchain network performs multiple functions simultaneously: it stores information, verifies data integrity, enables communication between parties, and manages settlement processes. This multi-functional system replaces multiple separate traditional systems and intermediaries, reducing overall complexity while maintaining comprehensive information exchange capabilities
Solution Approach 2:
The system enables insurers and third parties to directly exchange and verify information through the blockchain without requiring external intermediaries. The blockchain's cryptographic protocols and consensus mechanisms allow parties to self-verify information integrity and communicate directly, reducing system complexity and eliminating intermediary costs
3Productivity
If blockchain technology is implemented for subrogation claims, then time and cost are reduced, but new system infrastructure is required
Solution Approach 1:
The patent establishes a blockchain network infrastructure in advance that is specifically configured for subrogation claim processing. By pre-deploying the blockchain network and smart contracts, the system eliminates the need for ad-hoc infrastructure setup for each claim, enabling efficient claim resolution while managing infrastructure complexity through upfront preparation
Data Source
AI summary
A shared ledger operated by a group of network participants according to a set of consensus rules manages and resolves subrogation claims between a clamant and a defendant. Evidence regarding the value of the subrogation claim is sent to the shared ledger by entities involved in the claim such as sending to a smart contract deployed on the shared ledger. The parties to the subrogation claim may supplement evidence and settlement proposals on the blockchain by broadcasting a transaction or sending data to the smart contract. Once the claim is resolved, the parties may settle the subrogation payment off-chain or may transact a token having value on the chain. A subrogation smart contract may be programmed to release funds under certain conditions including holding a bond by a claimant and/or upon final resolution of the subrogation claim.