2023 Fintech and Financing Conference & Expo

Catastrophe Bonds: Killer Use Case for Digital Asset Adoption?

InsurTech Insights | Nov 5, 2022

Tornado wrecking ball - Catastrophe Bonds:  Killer Use Case for Digital Asset Adoption?Bermuda has long been an innovator in insurance and, under the leadership of its crypto believer Premier David Burt, it is now looking to be an innovator in digital assets.

  • Staked tokens as collateral: It’s based on an idea from Joe Ziolkowski, the CEO of crypto-focused insurer Relm. He wants to offer investors in staked token pools the chance to apply those holdings as collateral for special purpose vehicles that underwrite reinsurance contracts.
    • Ziolkowski believes an on-chain, smart contract-powered version of Insurance-linked Securities (ILS) could be backed with tokens locked up in the staking pools that run validators on proof-of-stake blockchains. In an interesting application of on-chain programmability to real-world problems, the staked funds could be locked up via a smart contract that would execute a reinsurance payout if one is triggered.
  • Problem: Insurance claims triggered by Hurricane Ian’s record-breaking destruction last month – with total losses seen as high as $75 billion – have combined with elevated uncertainty around climate change and with the general investor risk aversion stoked by rising interest rates to leave hedge funds and other entities reluctant to commit capital to the industry.

See: 

How Reworded Insurance Can Help Your Business

Insurance Industry Sitting on Treasure Trove of Big Data, As Regulators Wrestle Data Privacy

  • Many fear a lack of catastrophe risk insurance will tank housing markets in Florida and elsewhere. It’s a really big, little-discussed problem. And crypto could contribute to solving it.
  • Driving crypto adoption:  This on-chain reinsurance idea is one way in which insurance could be a key element in driving crypto adoption, thereby providing greater stability and security to decentralized finance (DeFi).  Crypto companies have huge demand for regular off-chain insurance. Traditional insurers have been reluctant to provide directors and officers coverage, liability coverage and cybercrime coverage.
    • With the insurance industry’s help, the DeFI industry will eventually figure out how to better manage risk across the entire ecosystem. Innovative insurance hubs such as Bermuda are ideally placed to lead that effort.

Continue to the full article --> here


NCFA Jan 2018 resize - Catastrophe Bonds:  Killer Use Case for Digital Asset Adoption?The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Catastrophe Bonds:  Killer Use Case for Digital Asset Adoption?FF Logo 400 v3 - Catastrophe Bonds:  Killer Use Case for Digital Asset Adoption?community social impact - Catastrophe Bonds:  Killer Use Case for Digital Asset Adoption?

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - Catastrophe Bonds:  Killer Use Case for Digital Asset Adoption?




 

Leave a Reply

Your email address will not be published. Required fields are marked *

19 − 1 =