Insurers need to be thinking about blockchain technology and virtual currencies like bitcoin and how to approach these areas of emerging risk as they become harder to ignore, according to panelists at the 2018 Professional Liability Underwriting Society (PLUS) Directors & Officers Symposium. “This is sweeping through for the insurance industry,” said Christopher O’Brien, partner at VENABLE LLP, during a panel discussion at the conference held in New York.
“Your clients are going to touch these risks even if they’re not blockchain companies.” Virtual currency, such as bitcoin, is an unregulated digital form of currency that can be used as a substitute for legally recognized currency and eliminates the so-called “middle-man”, which includes banks and clearing houses. Blockchain is the technology used for verifying and recording virtual currency transactions through a shared database.
Although some believe that when appropriately applied, blockchain is a revolutionary technology, according to O’Brien, there is also the potential for fraud if inappropriately applied. “I’d say this is the second pitch of the first inning,” he said.
“We’re at the very beginning of this technology, even though it’s been around since 2009.” Because it has only recently become more prevalent, and the hazards of blockchain technology and virtual currencies are still being quantified, there is hesitation among insurers about whether these risks are insurable, panelists said. “It’s a tough question,” said panelist Mary McCutcheon, partner at Farella Braun & Martel.
“I work in a lot of areas of insurance, and my clients don’t want to touch this area,” added panelist Christina Terplan, partner at Clyde & Co. US LLP. Read more from insurancejournal.com…
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