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Are Insurers Ready for Bitcoin?

An Indiana insurance agency recently began accepting Bitcoin payments. Will carriers join the trend?

Beauchamp-McSpadden, a multiline insurance agency located in Indiana, has been accepting Bitcoin payments for the past six to nine months. Although Bitcoin is fairly new to the retail space, the company has found that the benefits of accepting Bitcoin outweigh the risks.

“Bitcoin is pretty much like cash for the Internet,” the currency’s website explains. Each Bitcoin has a unique identification number and fluctuating value determined by a free market. Users can send and receive Bitcoins through a personal wallet located in a computer program or mobile app. The currency has recently been making noise in the digital payments space. More consumers are looking into obtaining Bitcoin and more retailers are expanding their payment options to include it.

[ Read: Esurance Takes On Teen Texting and Driving. ]

Now, Bitcoin has made its way into the insurance industry. “I didn’t really see a downside to it,” says Parker Beauchamp, president of Beauchamp-McSpadden, of allowing customers to pay in Bitcoin. “Even if it’s not a long-term option, we felt that we needed to be involved early.”

Accepting Bitcoin can be risky. “We didn’t want to be tied to something negative,” Beauchamp explains, and negative spotlight was a primary concern. He initially feared that others would view Beauchamp-McSpadden as a Bitcoin promoter, or that the company would be perceived as trying to avoid recognizing Bitcoin as income.

The Bitcoin payment system was implemented without error, and so far none of Beauchamp’s concerns have come to fruition. Beauchamp-McSpadden now accepts Bitcoin across all lines of insurance through Bitpay, a payment system that functions similarly to PayPal. Each payment is handled with caution, says Beauchamp, and the company pays required premiums and taxes associated with Bitcoin. In addition, consumer payments are cashed out the same day they are received, which helps to avoid problems caused by value fluctuations.

The company marketed its new payment strategy through announcements on its company website and various Bitcoin forums. From there, the news spread through word-of-mouth. The results so far have been largely positive: Beauchamp-McSpadden has received dozens of exclusively new Bitcoin-paying customers from across the country. While current customers can pay with Bitcoin, Beauchamp says, none have chosen to do so.

Beauchamp is happy with the results that Bitcoin has presented thus far but is unsure whether its success will be permanent. “I don’t know the future of Bitcoin, honestly, but I don’t care,” he admits. “If you want to pay [with Bitcoin], we’ll accept.” As long as it poses a convenience to customers, the option is there to stay, he believes.

Kelly Sheridan is an associate editor for Insurance & Technology. Prior to joining InformationWeek Financial Services, she was a staff writer for InformationWeek and InformationWeek Education. Kelly has also written for trade publication Promo Marketing and a number of ... View Full Bio

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Rick Murray
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Rick Murray,
User Rank: Apprentice
1/7/2014 | 6:31:49 PM
re: Are Insurers Ready for Bitcoin?
Nathan, I make no attempt to understand brokers--I just admire their persistence and ingenuity. But I sense that Bitcoin opens a divide between character types in all sectors, with the enthusiasts certain it is the new financial alchemy and skeptics convinced that it is toxic. Digital currency must mature and grow roots before it will trigger reactions that are industry specific.

Knowledgable comments are invited
Nathan Golia
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Nathan Golia,
User Rank: Apprentice
1/7/2014 | 5:11:44 PM
re: Are Insurers Ready for Bitcoin?
Premium payments is the low-hanging fruit, but then again why wouldn't someone bullish on Bitcoin not want their claims paid in the currency? Seems like a good way to get some of them at a low price Gă÷ sit on your claim check for a couple weeks, then cash out for a higher value.
Nathan Golia
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Nathan Golia,
User Rank: Apprentice
1/7/2014 | 5:09:46 PM
re: Are Insurers Ready for Bitcoin?
If paying your insurance bill is freedom, just call me Thomas Paine.
Nathan Golia
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Nathan Golia,
User Rank: Apprentice
1/7/2014 | 5:09:01 PM
re: Are Insurers Ready for Bitcoin?
Thanks Rick. Why do you think brokers aren't "scared off" by Bitcoin's issues? Smaller volumes of cash?
Byurcan
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Byurcan,
User Rank: Author
1/7/2014 | 3:14:53 PM
re: Are Insurers Ready for Bitcoin?
It's also a prime vehicle for Freedom, as it is not subjected to the whims of corrupt central banks who print money at will .
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
1/7/2014 | 2:32:35 PM
re: Are Insurers Ready for Bitcoin?
Bitcoin is a prime vehicle for money laundering, since it is unregulated. With the potential for money laundering, insurers will likely stay away for some time.
Kelly22
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Kelly22,
User Rank: Author
1/7/2014 | 2:21:41 PM
re: Are Insurers Ready for Bitcoin?
Because its value fluctuates so often, it seems like Bitcoin is pretty experimental for Beauchamp-McSpadden, and likely for most retailers who accept it. Right now B-M customers use it to make payments but the future of Bitcoin is hard to predict.
KBurger
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KBurger,
User Rank: Author
1/6/2014 | 10:00:27 PM
re: Are Insurers Ready for Bitcoin?
Agreed -- my sense at this point is that Bitcoin is more about currency trading than actual commerce right now. I'm not sure what kinds of insurance transactions it makes sense for --premium payments? commissions? claims payments? Maybe sometime, I don't see the value now.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
1/6/2014 | 9:54:58 PM
re: Are Insurers Ready for Bitcoin?
I agree with your point about the volatility. Bitcoin has gone been up and down in terms of value the past year. That will probably continue until regulators figure out how they want to handle the currency.
Rick Murray
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Rick Murray,
User Rank: Apprentice
1/6/2014 | 6:49:41 PM
re: Are Insurers Ready for Bitcoin?
Accepting digital currencies may be a useful marketing tool for brokers, but will not move into the highly regulated insurance space as long as they are not legally negotiable and continue to be excessively volatile. negotiability and stability are essential for regulatory compliance at an affordable cost.

The more interesting question, in my view, is whether third party intermediation that provides negotiability and stability at an affordable cost will provide the entry portal for digital currency holdings by insurers. If allowed to function without regulation, as Bitcoin now is, "currency translation" service providers might greatly expand the mainstream appeal of digital currencies.
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