Bitcoin “What’s New in Insurance” Series: Part 2
In this second part of the Bitcoin series in “What’s New in Insurance”, Ty Sagalow, President of Innovation Insurance Group, 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. Mismanagement and theft offer opportunities for the insurance industry. 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.”