Blockchain, as a versatile technology, is increasingly deployed in the insurance space. In fact, the global blockchain insurance industry is expected to grow to a size of $32.9 billion by 2031.
“The capital markets, especially the digital markets, now have access to the very uncorrelated asset class of insurance. They’ve got tokenized treasury bills, money market funds and private credit,” said Dan Roberts, co-founder and CEO of Nayms, when discussing blockchain-based insurance and his project during a recent Cointelegraph X Spaces. “The space has tokenized reinsurance to back as a very stable yielding product to put that capital to work. Bull market or bear market, it’s a very mature asset class that’s available now.”
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Emphasizing the conservative nature of the insurance industry, Roberts believes blockchain is a good match to bring transparency to the space. “It’s a largely closed environment where it’s unclear where the capital is. There are very high barriers to entry for people who want to participate in the trillions of dollars of premiums that are written every year. And there’s a lot of fraud going on, with some kind of unclear collateral being used for claims. So, blockchain is perfectly suited to ensure the verifiability of capital.”
Nayms focuses on three key areas in insurance, including property catastrophe, specialty lines and digital asset risks. The company allows investment in smart contract underwrites, which provide coverage for crypto-related risks through its regulated onchain insurance marketplace, with insurance as a liquid asset class.
“Nayms is reinsurance-focused, not insurance-focused,” Roberts stresses. “We allow our partners and other industry players to offload their risk through our marketplace, so they can continue to write more and more coverage. It’s a very direct way to increase the total limits, the total risk available to the digital asset space.”
Legally, Nayms is structured as a Bermuda-segregated account company, and the legal framework enables the company to make use of blockchain efficiently. As Roberts explained, “That’s a long-standing structure that existed before the crypto space came along, and it provides a robust legal framework for separating assets and liabilities. Blockchain provides technical enforceability, so you don’t just have a manual process of segregation and a process that can go through the courts if something goes wrong, but we also enforce that technically with the smart contract.”
Roberts believes transparency may be the key to fostering an environment where a lot of things and innovations can be built, adding "For example, completely new reporting lines to many different companies. If you’re transforming a company that’s setting up these kinds of segregated accounts for clients, and then you’re reporting on their behavior every two to six months, that’s not a good way for us to encourage liquidity and capital market participation.”
In contrast, Nayms’ approach, with its built-in transparency, allows for real-time engagement and trading. “Everything is transparent, which means you can engage with the performance of an individual program in real time. You can trade in and out of that program. It’s driving a lot of activity that just can’t happen in the insurance space right now,” the guest speaker stated.
Launched in October 2024, NAYM is the governance token of the Nayms marketplace, capitalizing the Nayms Liquidity Facility (NLF), which invests in insurance programs and rewards tokenholders with a share of potential returns. Beyond providing capital, NAYM holders can actively influence platform governance by staking, voting on proposals, and engaging in key decisions that shape the future of the marketplace.
“This is our way of encouraging a different kind of collaboration in the insurance space, which is reserved for the large pension funds, private equity and hedge funds. We offer a much more collaborative approach where communities can come in, provide liquidity and benefit from the performance of the market,” Roberts emphasized.
Looking ahead, he was excited about the potential for cross-chain interoperability. “We’re currently on Ethereum and Base, and I definitely expect to be on a number of different chains in the near future,” the CEO anticipated. “Cross-chain interoperability and chain abstraction bring not only a much better UI experience but also a stronger sense of community. People can now rally around subsets of an insurance program on a particular chain. They don’t have to leave and go to one where it’s built; they can build their own version. You can almost imagine a kind of friendly competition to see who can build a bigger pool on a particular chain, and it all feeds into a single asset class. In our case, reinsurance, of course.”
Roberts highlighted the growing role of artificial intelligence in the insurance industry as well. “The industry hasn’t been as quick to adopt blockchain as it is definitely adopting artificial intelligence, particularly for underwriting purposes, capital allocation and staying competitive in the global marketplace. The need to address liquidity challenges and mitigate risks associated with major events is driving this adoption. So the insurance industry is embracing this new technology, and we very much want to be a part of that progress,” he noted.
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