In 2009, Bitcoins took the world by storm. They were first created and released as a peer-to-peer technology that operated without a central authority of bank backing them. Recently, there have been several occurrences of Bitcoin exchanges suddenly disappearing, losing all of the virtual currency that had been stored.
Because Bitcoin is difficult to store securely, there is no way to recover them. This has caused much concern in the insurance industry, but earlier this year, UK-based Elliptic officially opened its Bitcoin vault, under the protection of a trusted insurer Lloyd’s of London.
In light of these events, insurance of Bitcoins has become a popular new topic, but should there be just as much buzz around the need for errors & omissions insurance for insurance agents? How would Elliptic be protected if the people handling Bitcoin accounts made a mistake?
Many technology consulting agencies use errors & omissions insurance to protect their companies against liability of mistakes like this and insurance agents should be treated no differently, especially when dealing with something such as Bitcoin, where everything is virtual and the mistakes are permanent.
If errors & omissions insurance for insurance agents was used, the policies would protect the conservative insurance companies from professional liability when it comes to the fickle Bitcoin even an insurance agent can make an error or omission that could cause Bitcoin owners to lose their investment completely. In this respect, an errors & omissions insurance for insurance agents prevents companies from bearing the full cost of defense and damages for lawsuits that may occur.
There is a possibility that the demand for a niche type of insurance such as this will eventually die out, but, as of right now, Bitcoin does not appear to be a passing fad. It still has a long way to go before it is universally accepted by the average person, but it is no longer an obscure technology.
With regards to insurance, the world is watching to see how Elliptic, as well as Bitcoin, fares in the global economy. At the moment, it’s clear that consumers want to protect the Bitcoins they buy, and there will have to be something to fill that void in the market, especially if Bitcoin continues to grow in popularity. The insurance industry is already approaching this technology with caution, but the demand is growing and might be well worth the leap. However, errors & omissions insurance for insurance agents might be able to help quell some of their concerns.