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Auto insurance company Metromile soon will let policyholders pay premiums with cryptocurrency and even receive claim payouts in this red-hot form of digital currency.
San Francisco-based Metromile, which offers pay-per-mile insurance, says that it will roll out cryptocurrency capabilities later this year. Metromile spokesperson Rick Chen says a launch date hasn’t been set for the cryptocurrency program.
Metromile says it will be the first insurer to both accept premiums and pay claims in cryptocurrency. Policyholders will be able to pick either cryptocurrency or old-fashioned dollars for premium and claim transactions.
Pay-per-mile insurance is a form of auto insurance that can lower rates for folks who don’t drive a lot. Monthly bills are calculated using a base rate plus a per-mile rate for the month.
Massachusetts-based Premier Shield Insurance, an insurance agency, says it lets policyholders pay auto, home and business insurance premiums and agency fees with Bitcoin, up to a limit of $5,000. But Premier Shield’s Bitcoin program does not apply to claim payouts.
Metromile “launched this option to support the increasing demand for Bitcoin and cryptocurrency payments from our customers. We’ve planned to support Bitcoin for years, but it wasn’t until recently that the technology and consumer adoption of Bitcoin was widespread enough for us to offer this,” Chen says.
Metromile says it will buy $10 million of Bitcoin in the second quarter of this year to pave the way for cryptocurrency transactions. In a news release, the company says it “believes allowing cryptocurrency payments will support its commitment to fairer insurance and promote financial resilience for policyholders as cryptocurrency becomes mainstream and a more significant portion of consumers’ assets.”
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 best-known cryptocurrency, dating back to 2009, it’s now among more than 5,000 cryptocurrencies in circulation today. As of May 5, the global cryptocurrency market was valued at $2.4 trillion, according to CoinMarketCap.
In the news 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 collaborate with regulators to satisfy 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 insurance policies in force, according to Chen.
The company plans to launch a U.S. expansion in the second half of 2021. Chen says Metromile policies will be available nationwide by the end of 2022.
Where Does the Insurance Industry Stand on Cryptocurrency?
In a recent report, the National Association of Insurance Commissioners (NAIC) says no NAIC committees or groups “have taken any action or established a position on cryptocurrencies.” The association says its staff “will continue to monitor the evolution of cryptocurrencies and address this topic further. . . .”
Kyle Schmitt, vice president of insurance intelligence at market research company J.D. Power, believes insurance regulators generally hold “a non-positive view” of cryptocurrency due to its price swings.
“Accepting payments in Bitcoin is easy enough if they are immediately converted to dollars upon receipt,” Schmitt says, “but premiums paid in Bitcoin could be highly volatile.”
Bob Hunter, director of insurance at the nonprofit Consumer Federation of America, says his stance on insurers dabbling in cryptocurrency would likely mirror Warren Buffett’s overall position on cryptocurrency. The billionaire investor has sharply criticized cryptocurrency as a risky, worthless asset.
“I would, as a regulator, not accept Bitcoin as backup for the business,” says Hunter, former insurance commissioner in Texas. “If consenting adults want to pay each other in the stuff, I’d allow that. But I’d want something more solid—dollars—to be there behind the business in case of emergency.”
Such backup funding is known in insurance circles as “surplus.” It’s the amount by which an insurer’s assets exceed its liabilities. Furthermore, Hunter believes any insurer that transacts in cryptocurrency should keep a tidy sum of cash in its reserves. Insurers are supposed to set aside a portion of premiums in their reserve funds to cover future possible claims.