“Dan and I have been in this space for about eight years, in crypto and insurance, and what we realised was that there is probably no more excluded asset class in the entire world than crypto.”
Joining his co-founder in an interview to discuss the launch of the digital assets insurance brokerage Native, CEO Ben Davis (pictured right) highlighted the cavernous protection gap surrounding digital assets. Native co-founder and CTO Dan Ross (pictured centre) highlighted that while insurance exists to help push civilizations forward, the industry hasn’t come out in full force to provide the security net to help revolutionise the digital assets sector.
But how has the protection gap surrounding these assets emerged, particularly in the context of an economy where intangible assets vastly outweigh tangible assets? For Ross, a core element of the answer centres on how the digital assets space is viewed – namely as a “fad” that didn’t need protection because it wouldn’t be around for the long haul. He noted that it’s a short-sighted view of a fast-growing industry and one that he and the team of Native are committed to turning around.
Davis highlighted that he and Ross have carried out educational sessions for insurers and brokers alike to boost their understanding of their space over the last eight years. “The first question that you’d get is, ‘why is this not a scam? This is only good for money laundering etc.’” he said. “So, they start at negative three and then you have to build them up from that point and educate away those aspersions. Crypto has had a bad PR problem for a long time and it has been very hard trying to change people’s way of thinking.
“The other reason why this protection gap has emerged is that back when we started to do these sessions in 2017, inflation was 2% and people didn’t really think about their money in the way they do now. It was a case that, ‘inflation is low and we’re in a wealthy western country’. When you talked about the need for Bitcoin, a lot of people didn’t really understand that. If you fast forward to now where inflation is where it’s at, and there’s a lot of political and social upheaval, and you look at countries that have adopted the Bitcoin standard and how well they’re doing, you can start actually having use cases.”
Being able to point to viable examples of what it looks like when digital assets are utilised correctly has been a true value add, Davis said, particularly at a time when people’s wealth is being eroded. He feels confident that the digital assets market is moving beyond the ‘dark days’ when the word crypto inspired imagery of threat rather than promise. There has been a lot of movement in the market, and a real groundswell of institutions beginning to embrace digital assets, not just as a concept but also as an opportunity.
“When we started doing all these education sessions, it was a tough slog, and you did need to educate people a lot,” he said. “But now the conversation is a lot easier. We are seeing more capacity start flowing into the market because people are starting to understand this space and to do away with the prejudices that they’ve held on to for so long.”
Ross noted that another consideration which has historically been a problem within the insurance industry is the concern around the reticence of some industry stalwarts to embrace new innovations. “Older generations typically don't have much incentive, at the height of their careers, to really rock the boat and do something new,” he said. “It’s not a case that we feel that this is the sole reason cryptocurrencies haven’t been embraced in insurance, but it is materially different now. You can feel a different energy and there’s a different magnitude of movement that we’re now seeing among those who are slightly younger, more tech-savvy and more open to technology.”
Those people are now in positions of authority, he said, so it’s not just a case of cryptocurrency reaching a maturation point but also more traditional industries getting to the point where they trust their technical people and themselves to know what they’re doing when it comes to embracing greater innovation. “They trust the people who are signing off on behalf of their company,” he said.
“They trust that they’re not just trying to jump on a fad but rather looking to protect themselves and their businesses in a way that previous senior management maybe didn’t feel comfortable doing. That's changing the dial massively. And I think it's not just in insurance, that’s happening in pretty much the whole ecosystem around finance.”
