Cryptocurrency and blockchain entities may seem like a hot market for insurance agents looking to specialize, but right now there are not many insurers willing to write it.
Before jumping in, agents would be wise to consider partnering with a wholesale broker with expertise so they can become familiar with the crypto landscape, according to Jonathan Reiner, an executive vice president at RT Specialty who works out of Chicago.
Reiner, who has been with RT since 2010, was at the PLUS (Professional Liability Underwriting Society) Conference earlier this month in San Diego, where he spoke with Insurance Journal at the conference about the cryptocurrency market. This has been edited for clarity and brevity.
Insurance Journal: Talk about the crypto market and what insurance professionals should know about it?
Reiner: In general, from a D&O, E&O, cyber perspective, it’s a pretty hard market. There are very few insurance carriers that are interested in writing coverage for crypto- or blockchain-based companies. Typically, it’s because they’re not familiar with how crypto works or the exposures that might arise out of it as well as the regulatory environment. It’s certainly a challenge for brokers just because there are only so many insurers that are willing to look at it.
Right now, the market is beginning to open up a little bit more. The insurance companies are trying to educate themselves by doing a lot of conference calls with clients, educate them on what their product offering is and then hopefully that continues to move in a trend where insurance companies want to insure crypto or blockchain-based companies.
IJ: What makes crypto tough to place?
Reiner: It’s the uncertainty. You know, it’s the regulatory environment or lack thereof. Typically, there has to be some industry precedent, right, and there just isn’t as much. So that’s been the biggest challenge and hurdle.
IJ: How would you recommend agents and brokers interested in getting into crypto and specializing in the area go about doing that?
Reiner: I would say keep in mind partnering with a wholesaler and expert, somebody who can help guide you through what the marketplace looks like. You know, one of the big hurdles we’ve seen is oftentimes a retail insurance broker might have limited or no expertise in the crypto space. They might have a relationship and an opportunity and they completely under-ballpark what the cost might be or what the coverage might look like.
The private company, D&O marketplace right now in general is pretty soft, so I think a lot of retailers have gotten very comfortable with assuming that pricing is going to be incredibly cheap and terms are going to be extensive.
So when it comes to crypto marketplace, that just isn’t the case. It’s because it’s a narrower playing field from the insurance company side. There aren’t that many carriers in it. The carriers that are doing it are excluding a lot of things and charging a lot of money for it. So, I would say, I would caution the retail brokers that are targeting that business to make sure they know the landscape before they go after it.
There’s obviously a lot of emerging companies in the blockchain and crypto field. Because of that there are more opportunities out there for retail brokers. You know, I wouldn’t say that there’s necessarily a ton of specialization across the board. There are certain retail brokers that seem to have a little bit more comfort in it, and because of that, clients are gravitating towards them naturally.
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