Insurance policies supported by Lloyd’s of London, a three-hundred-year-old British insurance market, can now be paid for with cryptocurrencies on Ethereum. This has been possible through a partnership between Llyod’s of London, Evertas (a coverholder of Lloyd’s of London) and Nayms, a smart contract-based insurance marketplace. They used the public blockchain Ethereum to help coordinate between brokers, insurers and the insured. The partnership allows customers to pay in USDC or native crypto, or place policies entirely on-chain
“What we’re enabling is for people using public blockchain infrastructure to interact with highly regulated, traditional, fiat-backed institutions in a way that is seamless,” said Evertas CEO J. Gdanski in an interview. “Whether it’s to pay in USDC or native crypto, or to place policies completely on-chain with the blockchain helping coordinate between a broker, the insured, and the insurers, we think this is a seminal piece of infrastructure.”
“The crypto native expertise we’re bringing into the underwriting process gives us a thorough understanding of the risks that we underwrite,” the company’s head of European underwriting, Nick Selby, in an interview. “It means we are highly explicit about what we will and won’t cover, and we can pay insured claims faster than anybody else.”
Why do we need blockchain in the insurance industry?
The insurance industry faces a multitude of challenges, including data protection concerns, slow claims processing, inefficiencies due to complex paperwork, and vulnerability to fraud. These issues stem from the industry’s reliance on traditional, centralized systems that are often slow, prone to errors, and expensive to manage.
Blockchain technology offers a solution by providing a decentralized, transparent ledger where all transactions are recorded and accessible by relevant parties in real-time. This not only improves the speed and efficiency of claims processing but also reduces the risk of fraud by creating tamper-proof records.
Therefore, we understand why Lloyd’s, Evertas and Nayms partnered to use blockchain to help streamline coordination between brokers, insurers, and policyholders. By allowing insurance policies to be managed entirely on-chain and paid for in cryptocurrency, this collaboration highlights how blockchain can reduce paperwork, enhance transparency, and speed up settlements.
Overall, a Lloyd’s of London consortium of syndicates backing crypto-native, on-chain insurance is a big step forward and is very promising for the future of the insurance industry. Looking ahead, the future of blockchain in the insurance industry promises more automation through smart contracts, faster policy administration, and better risk assessment by integrating with technologies like IoT and AI. As adoption grows, blockchain could fundamentally reshape insurance, making it more efficient, secure, and customer-centric.
To give some numbers, the global blockchain in insurance market size was valued at USD 766.0 million in 2022 and is projected to grow from USD 1,185.8 million in 2023 to USD 33,547.7 million by 2030, exhibiting a CAGR of 61.2% during the forecast period (2023-2030).