Cryptocurrency and blockchain entities may seem like a hot market for insurance agents looking to specialize, but right now there are not many insurers willing to write it.
Before jumping in, agents would be wise to consider partnering with a wholesale broker with expertise so they can become familiar with the crypto landscape, according to Jonathan Reiner, an executive vice president at RT Specialty who works out of Chicago.
Reiner, who has been working with RT since 2010, was at the PLUS Conference on Underwriting Society in San Diego earlier this month and spoke with insurance news about the crypto money market at the conference. It is arranged for clarity and brevity.
insurance news: Let’s talk about the crypto market and what the insured should know about it.
Reiner: Overall, a D & O, E & O, from a cyber point of view, is quite a difficult market. There are very few insurance companies interested in writing collateral for companies based on crypto or blockchain. Typically, it is because the encryption does not know how it works, or what the risks are, as well as the regulatory environment. It’s definitely a challenge for brokers, because there are too many insurance companies just want to look at it.
Interest in crypto insurance, high premiums, broad exclusions
Now the market is starting to open up a little bit. Insurance companies are trying to train themselves by conducting numerous conference calls with their customers, educating them on what product offers are and then moving on to a trend that insurance companies want to insure against crypto or block chain-based companies.
IJ: What makes cryptography difficult?
Reiner: That’s uncertainty. You know, the regulatory environment or lack. Typically, some industry peers should be right, and not just that much. So this was the biggest challenge and obstacle.
IJ: How would you recommend the agents and intermediaries who are interested in entering the crypto and who are interested in specializing in this field?
Reiner: I keep in touch with a wholesaler and expert who can help you understand what the market looks like. As you know, one of the biggest obstacles we see is that a retail insurance broker often has limited or no expertise in the crypto domain. They can have a relationship and an opportunity and they can be completely below the cost, what the cost might be, or what coverage might look like.
The private company, the D & O market, is currently quite soft in general, so I think a lot of retailers have made it very easy to think that pricing will be incredibly cheap and that terms will be comprehensive.
So when it comes to the crypto market place, this is not the case. Because it is a narrower playground by the insurance company. There are not many carriers inside. Carriers who do this exclude a lot of things and spend a lot of money on it. So, I can say that I want to warn retailers who want to make sure they know the scene before doing this.
Blockchain and crypto have a very developing company in the field. Therefore, there are more opportunities for retail brokers. You know, I don’t say that the board of directors is a specialty. There are some retailers in it that offer a little more comfort, so customers are naturally moving towards them.
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