Editor’s Note: We earn a commission from affiliate links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.
Metromile auto insurance will soon allow policyholders to pay premiums with cryptocurrency and even receive claims payouts in this red-hot form of digital currency.
San Francisco-based Metromile, which offers pay-per-mile insurance, says it will roll out cryptocurrency features later this year. Metromile spokesman Rick Chen said a start date for the cryptocurrency program has not yet been set.
Metromile says it will be the first insurer to both accept premiums and pay claims in cryptocurrency. Policyholders can choose either cryptocurrency or old-fashioned dollars for premium and claims transactions.
Pay-per-mile insurance is a form of car insurance that can lower tariffs for people who do not drive a lot. The monthly bills are calculated with a base rate plus a per mile rate for the month.
Massachusetts-based Premier Shield Insurance, an insurance agency, says it allows policyholders to pay auto, home, and business insurance premiums, as well as agency fees, using Bitcoin up to a limit of $ 5,000. However, Premier Shield’s Bitcoin program does not apply to withdrawals.
Metromile “introduced this option to support our customers’ increasing demand for bitcoin and cryptocurrency payments. We have planned to support Bitcoin for years, but until recently, Bitcoin technology and consumer acceptance was not widespread enough to offer this, ”says Chen.
Metromile says it will buy $ 10 million in Bitcoin in the second quarter of this year to pave the way for cryptocurrency transactions. In a press release, the company said it “believes that allowing cryptocurrency payments will support its commitment to fairer insurance and fuel policyholder financial resilience as cryptocurrencies become mainstream and a more important part of consumer wealth.”
Bitcoin is the original cryptocurrency, a currency that people can buy, sell, or exchange without the involvement of a bank. While Bitcoin is the most famous cryptocurrency dating back to 2009, it is now one of more than 5,000 cryptocurrencies in circulation today. On May 5, the global cryptocurrency market was valued at $ 2.4 trillion, according to CoinMarketCap.
In the press release, Metromile CEO Dan Preston says adding Bitcoin as a payment option is “the next logical step” for the digital insurance platform and its artificial intelligence powered claims process. The company says it will work with regulators to address any concerns they have about Metromile’s adoption of cryptocurrency.
Metromile currently offers coverage in eight states: Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. At the end of 2020, Metromile had 92,635 auto insurances in place, according to Chen.
The company plans to begin a US expansion in the second half of 2021. Metromile policies will be available nationwide by the end of 2022, Chen said.
Where does the insurance industry stand on cryptocurrency?
In a recent report, the National Association of Insurance Commissioners (NAIC) says that no NAIC committees or groups “have taken any action or established a position on cryptocurrencies.” The association says that its employees “will continue to monitor the development of cryptocurrencies and will continue to address this issue. . . . “
Kyle Schmitt, Vice President of Insurance Intelligence at research firm JD Power, believes that insurance regulators generally have a “non-positive view” of cryptocurrency because of the volatility of prices.
“Accepting payments in Bitcoin is easy if they are converted into dollars as soon as they are received,” says Schmitt, “but the rewards paid in Bitcoin can be very volatile.”
Bob Hunter, insurance director at the nonprofit Consumer Federation of America, says his stance on insurers dealing with cryptocurrencies would likely reflect Warren Buffett’s overall position on cryptocurrency. The billion dollar investor has sharply criticized cryptocurrency as a risky, worthless commodity.
“As a regulator, I wouldn’t accept Bitcoin as a backup for business,” said Hunter, a former Texas insurance commissioner. “If consenting adults want to pay each other with the stuff, I would allow that. But I would like something more solid – dollars – to be able to stand behind the deal in an emergency. “
Such backup financing is referred to in insurance circles as “surplus”. This is the amount by which an insurer’s assets exceed its liabilities. Additionally, Hunter believes that any insurer making transactions in cryptocurrency should keep a tidy amount of cash in their reserves. The insurers should put some of the premiums back in their reserve funds to cover possible future damage.
Comments are closed.