Insurance companies like Sweden-based all-lines provider, AXA, have been accepting bitcoin payments from holders across their non-life policies since as far back as 2021, paving the way for what looked to be a revolution in insurance payments. Yet, two years on, just a trickle of insurance companies have followed that trend, most of them based in America, and almost all of them with some stipulations in place. 

This is hardly surprising when you consider that the payment risks of all insurance companies are high, and one wrong move could result in significant amounts of lost income, especially if a claim is then made on an unviable Bitcoin-based policy. So, while it is possible to find a few Bitcoin-accepting insurers by working with a company like Tivly, the majority of insurers remain unsure about Bitcoin in general. And we’re going to consider why. 

Reason 1: Market volatility

As is the case with most mainstream platforms, Bitcoin’s market volatility is perhaps the main issue holding insurers back from accepting this payment as standard. After all, when a currency can fluctuate so dramatically across the space of just one day, there’s every risk that either policyholders or insurance companies will be left out of pocket. This is especially risky for insurance companies who also offer Bitcoin payouts, as a $10,000 payout could be worth as much as $40,000 or more by the end of that same day. That’s a costly risk, and it’s one that insurance companies who rely on the steady back and forth of income streams are often unwilling to face. 

Reason 2: Unfeasible payouts

It's also worth mentioning the infeasibility of Bitcoin payouts in general. AXA has managed to tow this line by not offering Bitcoin payouts on any of its policies. Generally speaking, though, businesses can’t cover fines with Bitcoin compensations, nor can homeowners pay for house repairs with Bitcoin in the bank. And, given that these are express purposes for insurance payouts of this nature, that’s somewhat of a problem. With that in mind, insurance companies who do accept Bitcoin may find themselves unable to use that currency in their operations, and ultimately out of pocket as a result. 

Reason 3: Security risks

Investment fraud regarding digital assets has soared over recent years, and, with cybercriminals stealing as much as $3.8 billion in Bitcoin across 2022 alone, insurers are understandably wary. AXA has, perhaps, found a way around this by not storing any Bitcoin on its balance sheets, but, with the majority of scammers and phishing attacks now demanding Bitcoin ransoms, even this solution leaves room for error. And, for insurers who handle large sums of money, and often sensitive client information, that risk is simply too high. 

Conclusion

While more insurers are slowly turning towards Bitcoin handling, the complications and risks inherent in navigating the cryptocurrency landscape remain too high for many. Still, led by AXA’s example, many insurers continue to trial different approaches that will hopefully enable them to safely, and viably, accept Bitcoin payments and claims in the future.