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Auto insurance company Metromile will soon allow policyholders to pay premiums with cryptocurrency and even receive damage payments in this brand new form of digital currency.
San Francisco-based Metromile, which offers pay-per-mile insurance, announces that the cryptocurrency features will be rolled out later this year. Metromile spokesman Rick Chen says no start date has been set for the cryptocurrency program.
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 entitlement transactions.
Pay per mile insurance is a form of auto insurance that can lower prices for people who do not drive a lot. Monthly bills are calculated using a base rate plus a mileage price for the month.
Massachusetts-based Premier Shield Insurance, an insurance agency, states that Bitcoin policyholders can use Bitcoin to pay auto, home, and business insurance premiums and agency fees up to a maximum 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 it wasn’t until recently that Bitcoin technology and consumer acceptance was so widespread that we could offer it, ”says Chen.
Metromile says it will buy $ 10 million worth of bitcoin in the second quarter of this year to pave the way for cryptocurrency transactions. In a press release, the company says that it “believes that allowing cryptocurrency payments will support its commitment to fairer insurance and boost policyholder financial resilience as cryptocurrency becomes mainstream and constitutes a larger chunk of consumer wealth.”
Bitcoin is the original cryptocurrency, a form of currency that people can buy, sell, or exchange without the involvement of a bank. While Bitcoin is the most famous cryptocurrency from 2009, it is now among more than 5,000 cryptocurrencies in circulation. According to CoinMarketCap, the global cryptocurrency market was $ 2.4 trillion on May 5.
In the press release, Dan Preston, CEO of Metromile, said adding Bitcoin as a payment option is “the next logical step” for the digital insurance platform and its artificial intelligence-based claims process. The company says it will work with regulators to address any concerns about Metromile’s introduction 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 U.S. expansion in the second half of 2021. Metromile guidelines will be available nationwide by the end of 2022, according to Chen.
Where does the insurance industry stand on cryptocurrency?
A recent report by the National Association of Insurance Commissioners (NAIC) states that no NAIC committees or groups have “taken 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 deal with this issue. . . . ”
Kyle Schmitt, vice president of Insurance Intelligence at research firm JD Power, believes that insurance regulators generally “do not rate cryptocurrency positively” because of its price volatility.
“Accepting payments in Bitcoin is easy enough if they are converted into dollars as soon as they are received,” says Schmitt. “However, the rewards paid in Bitcoin can be very volatile.”
Bob Hunter, director of insurance at the nonprofit Consumer Federation of America, says his stance on insurers dealing with cryptocurrency would likely reflect Warren Buffett’s general stance on cryptocurrency. The billionaire has sharply criticized cryptocurrency as a risky, worthless asset.
“As a regulator, I would not accept Bitcoin as a backup for the company,” says Hunter, a former Texas insurance commissioner. “If consenting adults want to pay each other, I would allow that. But I want something more solid – dollars – to be behind the deal in an emergency. “
Such security 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 money in their reserves. The insurers should reserve part of the premiums in their reserve funds to cover possible future claims.