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Universal Fire and Casualty Insurance Company (UFCIC; Waterford, Mich.), a multiline admitted commercial lines insurer, has announced that on June 7 it began accepting a variety of cryptocurrency for payment of premium for its direct online license and permit bonds and other surety bond products. UFCIC is thus the first insurance carrier in the United States to announce its acceptance of cryptocurrency for premium payments. Metromile (San Francisco) announced its intention to accept bitcoin in early May 2021, but does not expect to go live with the capability until 2022.
“We recognized early in our company’s innovation plan that the use of crypto for mainstream customer insurance transactions was not a matter of if, but when,” comments John Lucker, EVP-Chief Strategy & Analytics Officer, UFCIC. “As we developed and implemented our new direct online surety bond portal, we decided that now was the time to provide our customers with a broad and flexible array of convenient payment options that the marketplace is demanding.”
Giving Customers What They Expect
The acceptance of cryptocurrency for premium payment can be seen within a larger context of insurers’ current focus on customer centricity and convenience during the purchasing or claims process, according to Juan Mazzini, a senior analyst at Celent (Boston). “It’s no surprise then to see that same approach in the payments space, where customers expect instant and touchless payments, use digital wallets, and already some of them see crypto-currencies as another (digital) form of currency,” he says. “This move by UFCIC, to accept a variety of crypto-currencies for payment of premium for its direct online license and permit bonds and other surety bond products, is a perfect example of how insurers are adapting to what customers expect from them.”
With UFCIC’s rollout of its new web-based direct surety platform, ufcbonds.com, customers can pay for their surety bonds via ACH, credit card, and Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, notes Rick Klimaszewski, President, COO, and General Manager of UFCIC’s surety bond business. “Over time, we will continue expanding the menu of crypto-currency options available for premium payment,” he elaborates. “Our customers’ payment transaction process is seamless through the portal with the monetary exchange facilitated automatically by UFCIC’s payment processor.”
Terms of Competition
UFCIC characterizes its adoption of cryptocurrency as an aspect of an innovative approach to competition required today. The company says it recognizes that its success comes from a multi-pronged approach composed of strategy and product differentiation, ease of doing business, speed to market, customer service excellence, and cutting-edge technology.
“UFCIC is uniquely propelling itself forward as a multi-line, multi-product carrier by embracing innovative technologies, highly responsive and mutually beneficial distributor and customer service portals, and advanced analytics that leverage predictive models, AI, and Big Data resources,” comments Chris Timm, CEO, UFCIC.
Scant Global Adoption
Though no other U.S. carriers currently accept cryptocurrency for premium payment, some small agencies have adopted the technology, according to Celent’s Mazzini. In Europe, AXA Switzerland announced in April that it would allow its customers to pay premium in bitcoin. Unlike Metromile, which said that it would purchase $10 million of bitcoin in Q2 2021, AXA Switzerland (Wintertur) confirmed that it would not be holding any bitcoin on its balance sheet.
In South America, Río Uruguay Seguros (Concepción del Uruguay, Argentina) has adopted the use of cryptocurrency in token form to reward producers who can redeem the tokens at retailers, according to Mazzini.
In Russia, Teambrella, a P2P insurance platform has built its business model on cryptocurrency, Mazzini notes. “However, the company has the flexibility to use cryptocurrency without regard to national borders precisely because it’s not a carrier,” he adds.