Hype or the future of insurance?

Likewise, insurance policies on a smart contract through a blockchain could revolutionize the way policy wording is developed, distributed and …
Hype or the future of insurance?

IBC caught up with Gallagher Canada’s Mark Morency to find out what they really mean for the insurance industry.

IBC: How have insurers responded to blockchain and cryptocurrency clients?

Mark Morency:
With any emerging technology, insurers struggle to underwrite it because of its limited track record. Some insurers are open to blockchain; however, there are only a select few that will consider cryptocurrency clients. Blockchain is the engine for cryptocurrency, along with other security applications, so not all blockchain companies are a cryptocurrency risk, but that’s not always clear for insurers. There is a large client base that specializes in specific blockchain applications, including aspects of cryptocurrency, so when working with insurers, we work hard to understand the client’s business and differentiate their value proposition. I’ve spent a lot of time speaking with insurers to establish the credibility of these clients.

IBC: Will blockchain or cryptocurrency affect the insurance industry?

MM:
In any industry where identity management, trust between counterparties and fraud prevention are required, blockchain is a tool that can potentially resolve these issues. These are all characteristics that are important for insurance. For example, both claims and policy issuance can be significantly improved; if you look at the way proof of claim and forensic accounting occur after an event, it can be very time-consuming and expensive. Blockchain solutions can remove much of the reconciliation requirements, turning claims management into an almost instantaneous process. Likewise, insurance policies on a smart contract through a blockchain could revolutionize the way policy wording is developed, distributed and understood.

Cryptocurrency is a means of exchange that’s not necessarily being used on a large scale. If you look at North America, especially in the US, users of the currency and the SEC have treated it as an investment product, which is very different than how it is being treated in some other countries. It is better understood as a means of exchange or form of liquidity. Cryptocurrency can be thought of as internet-enabled cash. There’s a lot depending on regulation as to how cryptocurrency will find its place in the world. At this point, it is too early to say if it will have any meaningful role in insurance.

IBC: How will blockchain and other technologies impact financial institutions in the years to come?

MM:
This is why financial services is such an exciting industry: The most interesting trends are both invention – that is, creation of new technologies – and innovation, or creating new ways of using technology. For example, payment systems within banking – right now, a small fraction of the world’s payments happen on cryptocurrencies. While it is a new phenomenon that banks and insurers should monitor and be aware of, it is not yet a big disruptor in the payment system. Payment technology is already very advanced on the front end for consumers but hasn’t changed much for many years on the back end – behind the scenes. The payment industry is going to be impacted by both technology invention and innovation.

A growing number of transactions occur, and will occur, on smart contracts, and a growing amount of activity will be recorded on a blockchain. These are innovative uses of technology, not new technologies. While we focus on these technologies, the largest trends are happening right under our noses.

The trend to watch is who controls the payment system. In March, FIS made a deal to buy Worldpay, which alone processes more transactions than the largest American banks. Merchant processing was a business dominated by banks until they sold these divisions over the past few decades. Increasingly, the merchant processor is not a bank, yet the merchant processor owns that merchant relationship, and the payment processor, which is essentially the plumbing for the payment system, controls the client relationship. With the growth of e-commerce and blockchain eventually allowing for trusted transactions without an intermediary, this leaves the payment processors in a powerful position to take the client relationship away. I believe the long-term play between FIS and Worldpay is about having a global standard for multinational corporations to deal with, which will have a significant impact on the financial services industry.

New innovations are also supplemented by new tech such as AI, intelligent voice recognition and emulation, Big Data, and eventually quantum computing. The speed and scalability issues that innovations such as blockchain face today are going to become irrelevant because of new inventions. How many hours within financial institutions are spent on reconciliation, answering calls or fraud detection? All of these activities can be better done by tech that exists today and is coming to financial institutions in the very near future.

As these technologies evolve, financial institution companies are implementing them, and directors and officers have to consider the impact on their brand and reputation. Providers of tech have to meet increasing amounts of scrutiny of their insurance policies when supplying financial institutions. Brokers and insurers have to also consider the advice we are providing and whether we are advising appropriately on cyber and D&O insurance.

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South Korean Cryptocurrency Exchange Coinone Partnered with CertiK and Xangle to improve …

In the future, the two partners will provide public disclosure information and smart contract audit information about the cryptocurrencies listed CoinOne …
South Korean Cryptocurrency Exchange Coinone Partnered with CertiK and Xangle to improve safety and transparency

The Coinone exchange of South Korea has recently made an announcement of its partnership with a Blockchain cybersecurity company, CertiK, and a disclosure platform for crypto assets, Xangle, to provide more protection, transparency and useful information to crypto investors. In the future, the two partners will provide public disclosure information and smart contract audit information about the cryptocurrencies listed CoinOne exchange.

Xangle will provide protection to cryptocurrency investors and enhance project transparency but providing useful information about token unlock, project business model change and token governance, investment stocks considering price volatility, etc.

On the other hand, CertiK will provide information about projects listed by CoinOne and prevent accidents such as cryptocurrency exploitation caused by code security vulnerabilities, verify project technology at the code level, and secure project-related information.

The collaboration is a result of tightening scrutiny and increased risk of hacking on crypto exchanges in South Korea and all around the world. South Korea’s Fair trade commission (FTC) made a call to change the regulatory policy for crypto exchanges in the country in June. Also, the South Korean financial watchdog Financial Services Commission (FSC) is planning to supervise crypto exchanges by itself. Authorities are also concerned about hacking as the second-largest crypto exchange of the country, Bithumb, was hacked two times in one year, losing more than $50 million.

cyber-securitycyber-security

CoinOne is very active in South Korea and it also launched its operation in Indonesia in June 2019. Security is a fundamental problem for all exchanges and cryptocurrencies, and without it, decentralization is not possible. This South Korean exchange is making efforts to make its operation safe and reliable.

The CertiK company, founded in 2017 and based in New York, uses formal verification technology to mathematically prove whether smart contracts and blockchain ecosystems are bug-free and hacker-resistant. It launched its own CertiK Chain blockchain on July 22, to promote a more efficient blockchain ecosystem for all. This CertiK chain provides developers the security and flexibility to code with confidence. CertiK wants to build a Blockchain ecosystem that can provide unbeaten end-to-end security.

Xangle, based in Seoul, is the most accurate disclosure platform for cryptocurrencies and it provides most up to date information to crypto investors and community. It believes in transparency and it is one of the most reliable sources of business intelligence, analysis, and news for token projects.

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US Congressman Introduces New Bill to Guard ‘Exchange of Virtual Currency’

A member of the United States House of Representatives has put forward a bill that will ensure that the profit or loss on any exchange of virtual …

A member of the United States House of Representatives has put forward a bill that will ensure that the profit or loss on any exchange of virtual currencies of the same kind, is not recorded or recognised by law.

Include Cryptocurrency

Currently, the Internal Revenue Code of 1986 is the standard for exchange of property and says the following:

“No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.”

However, the new bill recently presented, called the “Virtual Value Tax Fix Act of 2019”, pursues the modification of this code, to also allow for gains or losses of cryptocurrency be excluded as well.

“The exchange of virtual currency for virtual currency of like kind shall be treated in the same manner as the exchange of real property for real property of like kind.”

The bill was introduced on Thursday the 25th of July by Rep. Ted Budd an was passed on to the Committee on Ways and Means.

Crypto Congress

Bills regarding the trading and use of cryptocurrency, have been introduced to Congress on different occasions. Last month, Congressman Tom Emmer reintroduced a bill that excludes any enforcement on relevant taxpayers until such a time when the IRS delineates specific rules on the reporting of profits and losses with regard to any hard forked cryptocurrencies.

The bill was called the Safe Harbor for Taxpayers with Forked Assets bill.

Imagine Credits: Stock Photo Secrets

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UK Finance Watchdog Ruled Out the need to Regulate Bitcoin and Ethereum

UK’s top financial watchdog, the Financial Conduct Authority (FCA) said that there is no need for regulation of Bitcoin and Ethereum. In its statement …

UK’s top financial watchdog, the Financial Conduct Authority (FCA) said that there is no need for regulation of Bitcoin and Ethereum. In its statement issued in a document, “PS19/22: Guidance on Cryptoassets,” the FCA declared that Bitcoin and Ethereum are considered as “exchange tokens” and only used as a means of exchange. It also said that these cryptocurrencies will not be included within the regulatory jurisdiction of the FCA. The FCA also expressed that the stable coins and utility coins can be regulated if needed.

The FCA is working to crack-down on unlicensed crypto-investment schemes and scam projects. In its released statement, FCA said that security tokens are similar to shares and debt instruments, which makes them suitable for regulation. One of the biggest Finance Watchdogs of the world said that a token which is not a security token or an e-money token will remain unregulated. Regarding stable coins, it said that only some of the stable coins can be regulated as not every stable coin falls in the category of e-money.

The motive of Finance watchdogs is to keep a track of financial activities and such services offer debt relief to people suffering from the debt crisis. These units run debt consolidation programs on a global level and help to meet the borrowing needs of people.

FCA’s documented proposal received a positive response from the public. With the help of this document, it has become possible to clearly classify the digital assets into existing categories. Christopher Woolard, FCA executive director of Strategy and Compensation said that the categorization will help to effectively carry out crypto-asset activities in the complex market.

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Expanding Their Reach: Top 6 Institutions Operating in the Crypto Space and Driving Adoption

After all – fast, cost-effective and trustless payments sat at the core of Satoshi Nakamoto’s original Bitcoin whitepaper. With that being said, we are still …

Love it or hate it – research and development budgets that seek to explore the benefits of blockchain technology are now being allocated by virtually every large-scale organization. While much of this centers on the blockchain protocol itself, there is also a significant amount of corporate interest in the utilization of cryptocurrencies as a means to facilitate payments.

After all – fast, cost-effective and trustless payments sat at the core of Satoshi Nakamoto’s original Bitcoin whitepaper. With that being said, we are still light-years away from achieving mass usage of cryptocurrencies at a consumer level.

Nevertheless, with more and more globally recognized institutions entering the crypto space, this can only help the industry in its quest for mainstream adoption. Here are six of the most notable institutions that now have a foot in the crypto arena.

Facebook

We thought it would make sense to start with Facebook Inc. (NASDAQ:FB), not least because the global social media giant recently announced that it is set to launch its very own cryptocurrency in 2020. Rumors had been circulating for some time regarding Facebook Inc. (NASDAQ:FB) ’s intention to enter the crypto space, and we now know the plan.

Known as Libra, the cryptocurrency will be used to facilitate global payments, with the company looking to make everyday transactions more accessible for those living in third world economies. However, Project Libra has since received a significant amount of attention from governments and regulators throughout the world, with concerns centering on privacy and money laundering abuse.

Either way, the fact that a global giant like Facebook Inc. (NASDAQ:FB) is looking to enter the crypto space essentially gave the industry overnight credibility.

While other institutions are exploring blockchain & crypto platform integrations, Skrill is already making headway with an integrated Buy/Sell option, exposing tens of millions of their users to digital assets and distributed ledger technologies (DLT), driving adoption to the space

While other institutions are exploring blockchain & crypto platform integrations, Skrill is already making headway with an integrated Buy/Sell option, exposing tens of millions of their users to digital assets and distributed ledger technologies (DLT), driving adoption to the space

Skrill

Often regarded as a world-leader in developing payment solutions and one of the leading payment processors out there, Skrill is a UK-based global money transfer service. Much like in the case of PayPal, the platform allows you to seamlessly send and receive money across the internet. While not as big as Facebook, Skrill entered the cryptocurrency space by allowing its users to easily buy and sell up to eight different coins at the click of a button.

The service appeals to everyday consumers for a number of reasons. Not only is Skrill a heavily regulated entity with the capacity to facilitate instant fiat currency deposits, but the platform acts as a trustworthy custodian on customer funds and enables a smooth experience of exchange.

Skrill’s move into the space can only help mainstream adoption, not least because everyday users need a burden-free way to actually enter the market. Typically, this is no either feat for those with little to no experience of buying and selling digital currencies.

IBM

While much of the public spotlight has been on International Business Machines Corporation’s (NYSE:IBM) exploration of blockchain technology, the company is also involved in cryptocurrency payments. In fact, it is more than just involved, as the company recently signed up six of its banking partners to issue stable coins.

The banks, which includes institutions from South Korea, Brazil and the Philippines, have actually signed a letter of intent to utilize the stablecoins on International Business Machines Corporation’s (NYSE:IBM) bespoke blockchain network – World Wire. This will ultimately have the desired effect of streamlining cross-border payments.

Much like in the case of Facebook Inc. (NASDAQ:FB) , the fact that an established, globally recognized institution like IBM (NYSE:IBM) is looking to devote vast resources into the crypto space can only help the industry’s quest for mainstream adoption.

From calling Bitcoin a "Fraud" to possibly issuing their own stablecoin, JPMorgan's take on cryptocurrencies shows the classic signs of tech adoption over the years – If you can’t beat them, join them.

From calling Bitcoin a “Fraud” to possibly issuing their own stablecoin, JPMorgan’s take on cryptocurrencies shows the classic signs of tech adoption over the years – If you can’t beat them, join them.

JPMorgan Chase

Who would have thought it? Not so long ago, JPMorgan Chase &Co (NYSE: JPM) CEO Jamie Dimon once referred to Bitcoin as a ‘Fraud’. However, as was reported earlier this year, the Wall Street institution has since declared it’s going to launch its very own digital currency – the JPM Coin.

With the bank involved in $6 trillion worth of payments each and every day, it comes as a surprise to see JP Morgan Chase & Co (NYSE: JPM) look at innovative alternatives. The JPM Coin will be used primarily as a stablecoin pegged to the US dollar, subsequently easing the process of settling payments via its permissioned distributed ledger.

Ultimately, and from the perspective of cryptocurrency evangelists, the most useful benefit to come from JPMorgan Chase’s (NYSE: JPM) sudden sentiment reversal is that it shows skeptics of the industry that digital currencies are here to stay.

AT&T

If the cryptocurrency arena needed further clarity of its legitimacy, then look no further than AT&T (NYSE:T). In May this year, the company announced that it would start accepting cryptocurrencies such as Bitcoin, Bitcoin Cash and Circle’s US dollar coin as a means to pay monthly bills.

With the US conglomerate responsible for over $170 billion in revenues last year, this further highlights the efficiencies of using cryptocurrencies as a payment method. While it is assumed that the share of customers using the crypto facility will initially be minute, usage will no doubt increase as digital currencies become more and more mainstream.

Nevertheless, for mainstream cryptocurrency adoption to grow in size, we need more and more consumer enterprises to join AT&T (NYSE: T) in the acceptance of everyday payments.

Japan’s Ministry of Finance

It is important to note that it is not just corporate institutions that are looking to enter the crypto space. On the contrary, a number of government institutions are also looking to capitalize. For example, the Japanese government is looking to challenge SWIFT in its dominance of the multi-trillion dollar cross-border payments system.

In fact, the SWIFT-alternative, as it is being informally branded, was recently approved by global anti-money laundering standard-setters the Financial Action Task Force. While those behind the project have noted it will likely be a few years before the plans come to fruition, it is nonetheless an exciting prospect for cryptocurrency proponents.

In effect, as great as corporate interest in cryptocurrency payments is, the industry still needs the backing of mainstream governments. The fact that a leading economy like Japan is looking to take the plunge only makes the long-term goal of global adoption stronger.

The Bottom Line?

In summary, it is often argued that the future of cryptocurrencies and blockchain technology will primarily be focused on the latter. While it is true that investment in blockchain-related research is growing at an exponential pace, it is also important to recognize that institutions are increasingly looking to utilize the benefits of cryptocurrencies.

With the likes of Facebook (NASDAQ:FB), IBM (NYSE:IBM), Skrill and even the Japanese Ministry of Finance all looking to get a headstart, it is reasonable to assume that more and more institutions will look to enter the space in the very near future.

Disclosure: None.

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