An insurance’s assurity to ensure protection against financial losses seems to be experimented using cryptocurrencies. It’s believed that cryptocurrency-backed insurance plans can be a benefactor in digital asset-based investments. From what it’s understood, health and life insurers are looking to inculcate ways to add blockchain in the insurance sector.
According to ConsenSys, a blockchain software company, smart contract-oriented transactions can apply different products for helping underinsured markets. The company also stated that Ethereum’s smart contracts and decentralised applications (dApps) can supply insurance in an automated manner, along with tamper-proof audit trails. “I believe crypto insurance plays a role in supporting digital asset-based investments by mitigating risks, fostering trust and confidence, safeguarding against exchange-related vulnerabilities, and facilitating institutional adoption,” Edul Patel, co-founder and CEO, Mudrex, a crypto-investing platform, told FE Blockchain.
Insights from a survey conducted by Privacy Affairs, an information provider, $4.3 billion worth cryptocurrency hacking took place between January and November, 2022. There was a 37% increase, in comparison to cryptocurrency scams which took place in 2021. As stated by Taxguru.in, an accounting and auditing firm, cryptocurrency-backed insurance can help protect investors against different frauds and Ponzi schemes. It’s also been emphasised that crypto’s influence on insurance can help instil liquidity for businesses and individuals, and ensure safeguards against catastrophes, human errors, and legal uncertainties.
“I think crypto insurance protects lenders against default or insolvency, minimising digital asset lending losses. In crypto, mutuals are replacing traditional insurance. This community-centric method can let members assess risks, vote on insurance claims, and obtain coverage,” Rajagopal Menon, vice-president, WazirX, a cryptocurrency exchange, mentioned.
As stated by Research and Markets, a market research store, global blockchain-backed insurance market can clock $32.9 billion in 2031, at a 52.4% compound annual growth rate (CAGR) between 2022-31. The platform also highlighted key contributors of this market such as SafeShare Global, Microsoft, Symbiont, IBM, Oracle, among others. Allied Market Research, a market research firm, stated that factors which can drive cryptocurrency-backed insurance landscape include adoption of technologically advanced software platforms, increase in fraudulent insurance claims, and increase in demand for secure online platforms.
Moreover, future predictions indicate that cryptocurrency insurance has a promising future, since major financial companies are expected to apply the institutional impact on it. As stated by Deloitte, a professional services firm, the need for an interoperable health record should drive stakeholders’ impact on cryptocurrency-based insurance plans, both short-term and long-term.