Hash-Verified Subrogation Net Settlement on Distributed Ledgers
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Conventional systems for facilitating subrogation claim payments between insurance companies are inefficient, leading to unnecessary payments and inefficiencies in payment making, exchange, and claim status tracking, with timeliness deficiencies.
Innovation Solution
A computer-implemented method using a distributed ledger to generate a subrogation net settlement smart contract that determines a proof of agreement by comparing cryptographic hash values from both parties, allowing for a single payment for multiple settlements over a threshold time period, and deploying this contract on a distributed ledger network.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If conventional systems process each subrogation claim payment individually between insurance companies, then payment tracking and claim status monitoring are maintained, but the number of payments increases unnecessarily and system efficiency decreases
Solution Approach 1:
The patent combines multiple individual subrogation claim payments into a single net settlement payment by aggregating payments owed in both directions between insurance companies. This merging eliminates redundant transactions while maintaining accurate tracking of individual claim statuses through the distributed ledger system.
2Reliability
If multiple individual payments are made between insurance companies for subrogation claims, then each payment can be tracked separately, but the complexity of payment management and exchange increases
Solution Approach 1:
The distributed ledger system serves multiple functions simultaneously: it tracks individual claim statuses, records net settlement agreements, manages payment exchanges, and provides audit trails. This multi-functional approach reduces overall system complexity compared to separate systems for each function.
Solution Approach 2:
The distributed ledger acts as an intermediary that mediates between multiple insurance companies, providing a shared, immutable record of all subrogation claims and settlements. This intermediary enables transparent tracking and verification without requiring complex bilateral tracking systems between each pair of companies.
3Loss of time
If conventional systems process subrogation claim payments without aggregation, then individual claim settlements are finalized promptly, but the overall timeliness of net settlements between companies deteriorates
Solution Approach 1:
The system performs preliminary aggregation of multiple subrogation claims into a net settlement amount before final payment processing. This preliminary action groups related transactions together, allowing for more efficient batch processing while maintaining the timeliness of individual claim resolutions through the distributed ledger's real-time recording capabilities.
Data Source
AI summary
Aspects of distributed ledger technology are leveraged to verify subrogation settlements. In particular, two parties to a subrogation claim provide cryptographic hashes to a subrogation demand smart contract stored at an address on a blockchain. The subrogation demand smart contract determines that the parties have reached an agreement by determining that the cryptographic hashes match. A settlement amount from the subrogation claim may be appended to a set of settlement amounts to determine a net settlement amount to facilitate a single payment between the parties on a periodic basis, such as daily, to alleviate the need for the parties to send or receive a payment for each individual settlement amount.