Aon Launches Cryptocurrency Pilot

This week, global re/insurance broker Aon announced the launch of a “first of its kind” cryptocurrency pilot that utilizes blockchain technology in the placement of insurance with regulated, professional insurance entities. 

Aon is collaborating with Nayms Ltd., an insurtech platform for insuring risk, particularly cryptocurrency risks. The Nayms platform allows crypto-investors to cover risk (in the pilot case here, risk of digital asset theft or fraud) in return for a yield, by holding collateral in smart contracts. As applied to cryptocurrency insurance, this eliminates the volatility between the currency of the insurance protection and the currency of the risk, thereby eliminating the need for policies to price in the risk of uncertainty in fluctuation of the value of crypto assets. Policies for crypto-assets are thus less expensive and can scale as the cryptocurrency market expands. By bringing together investors whose collateral will be used to insure specialized risks, the Nayms Ltd. insurtech platform is arguably a modern variant of how the Lloyd’s of London insurance market used to operate. In the Lloyd’s of London market, pools of individuals, known as “Lloyd’s names,” provided the financial backing for the risks assumed by Lloyd’s underwriters. “Nayms” is a play on the “Lloyd’s names” moniker. 

Also collaborating in the newly-announced cryptocurrency pilot is Relm, a Bermuda specialist insurer, that will underwrite the contracts. The first pilot will be conducted with Teller Finance, a decentralized lending protocol. 

According to Benjamin Peach, Associate Director & Digital Assets Specialist, Global Broking Centre at Aon, this pilot is “the first step to creating a platform for digital asset companies to scale up their cover efficiently and cost effectively as the market continues to expand.” Dan Roberts, CEO at Nayms, explained: “As the digital asset space soars to $1 trillion, the need for appropriate insurance protection to scale alongside that growth will be vital for the sustainability of this innovative market. By working with Aon and Relm, we are enabling collaboration between technology, regulation and the existing insurance marketplace, bringing a robust solution for the cover of digital asset risk to the market." And Joseph Ziolkowski, CEO at Relm, said: “In addition to supporting numerous digital asset companies all over the world with financial and professional lines coverage, the Nayms platform will enable Relm and Aon to transact insurance in a manner that creates more alignment with our target insureds.”

Crowell & Moring is helping clients understand the most promising uses of cryptocurrency and blockchain, whether they are developers and vendors seeking to capture new opportunities, or companies and end users that are considering joining or deploying blockchain networks.