With any new market there are risks. Some experts say the crypto risks are greater than anyone can imagine because it is still relatively new. Many of the crypto apps which use blockchain, claim to reduce the risks and add protections because of the technology. However many investors are wanting more assurances and protections.
In steps the concept of insurance. The business of spreading risks among many has entered into the crypto space with unregulated virtual insurance contracts to protect against losses.
These "policies", which also operate under blockchain technology, consolidate, or pool, the money of many investors to back the promise to pay for losses of a few. They will pay out when a certain set of parameters outlined in the contracts are met and occur. This is similar to parametric insurance contracts you see in the traditional marketplace for covering things like, event cancellations due to weather.
This new crypto pooling of money is just old fashion insurance using modern computer technology. The spread of risk is a basic tenet of risk management and loss protection. One should not be surprised that it is taking hold into the crypto currency marketplace.
The big insurance companies and brokers are partnering with tech platforms to find ways to complete insurance transactions in the crypto space. It will only be matter of time, as the crypto market continues to grow, that insurance like protections will be easily available for crypto investors.
Stay tuned on this one folks. Until next time be careful out there and know your risks.
Posted by: G. Kevin Nemith CIC. CRM President, Agency Leader for CNC Insurance & Pfister Insurance. Hilb Mid-Atlantic Group.
knemith@hilbgroup.com
Top 20 insurance brokers and risk managers in the USA.
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