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Insurers don’t just cover cryptocurrency; some companies are accepting premiums in cryptocurrency, and others are investing in the digital assets.
Universal Fire & Casualty Insurance Co. accepts cryptocurrency premium payments for its surety bond business.
Customers expressed interest in paying premiums with cryptocurrency and “we found it was not a particularly difficult thing to do,” although it required some regulatory approval, said John Lucker, executive vice president of the Waterford Township, Michigan-based insurer.
Universal cannot hold cryptocurrency on its balance sheet, but it found a payment provider able to accept cryptocurrency on its behalf that automatically converts the crypto payments into U.S. currency, he said, declining to name the provider.
As a result, “we don’t incur any volatility risk,” he said, and “the payment provider is responsible for making sure the payments are legitimate.”
Axa S.A.’s Swiss unit announced in April 2021 it will allow customers to pay premiums in bitcoin for property/casualty products.
In December 2020, Massachusetts Mutual Life Insurance Co. made a $100 million investment in bitcoin for its general investment account. At the same time, it made a $5 million equity investment in New York Digital Investment Group LLC, which provides investment and technology services for bitcoin, according to the insurer.
Michael Carr, Chicago-based head of risk engineering for insurtech Coalition Inc., said the company has a small cryptocurrency investment in its portfolio.
“It’s going to remain a small part of anybody’s investment portfolio for the foreseeable future” because of its volatility, he said.
Edin Imsirovic, Oldwick, New Jersey-based associate director with A.M. Best Co. Inc., said insurers have only invested in cryptocurrency in “minuscule amounts” because of its volatility and because “the regulatory framework around these assets has not been determined yet.”