As interest in digital currencies continues to grow, insurers are wading into the market. While public attention currently is more focused on the volatility of cryptocurrencies – digital currencies not issued by a central bank - Conning notes in our Viewpoint “Crypto Comes into Focus” that insurers are considering the potential of digital currencies for product and operational purposes.
Cryptocurrencies such as Bitcoin have been the subject of investments from some large life insurance firms. These cryptocurrencies could become product features, for example as investment options in variable annuity and variable life subaccounts. Property & casualty firms might benefit from operational uses: the blockchain technology providing a public database for cryptocurrency transactions could have a role in claims paying, offering instant payouts in a preferred currency.
Regulators are watching developments closely, and while a number of issues must be resolved - e.g., the NAIC currently deems that cryptocurrencies are non-admitted assets as they don’t meet it definition of “cash” – it appears that parties across the industry are evaluating potential use of these new currencies.