In this second part of the Bitcoin series, Ty Sagalow explains the growing legitimacy of Bitcoins, and risks associated with the peer-to-peer payment system.
There are approximately $8 billion dollars of Bitcoins around the world, says Ty, used to buy a growing number if online products and services. He questions whether holding and storing Bitcoins has risk and what it means for the insurance industry.
Mr. Sagalow sees three main exposures: price fluctuation, mismanagement and theft. According to Ty, “Mismanagement is an issue the insurance industry is familiar with and…risks covered by D&O carriers/underwriters on a daily basis.” Ty believes Bitcoin companies should buy D&O insurance and will likely pay higher rates than more established companies.
Great American and a number of Lloyds syndicates have announced the creation of Bitcoin theft policies. According to Ty, Bitcoins “should be evaluated as a cyber risk” and offers opportunities for cyber and fidelity insurance carriers “too big to ignore.“