British-based insurtech firm Nayms Ecosystems is opening an office in Bermuda.
The company believes its smart insurance contracts can be applied to facilitate the underwriting of digital asset risk and to provide a liquid market for insurance-linked securities trading.
Nayms, which was awarded its digital asset business licence and its innovative general business insurer licence by the Bermuda Monetary Authority, will be conducting trials over a 12-month sandbox period.
The insurtech firm is a collaboration between Daniel Roberts, its co-founder and chief executive officer, and incubator Insurtech Gateway.
Nayms chose Bermuda because of its world-leading ILS market, as well as progressive legislation and regulation for digital asset businesses.
Nayms began as a project exploring the problem of sourcing cryptocurrency capacity to cover crypto-losses, given the mismatch between assets and liabilities. The solution that grew out of this problem was a truly digital contract of insurance, with wider applications across the insurance industry.
The Nayms platform can be applied to the ILS market in a unique way. There is a liquidity problem in the ILS market, with the Nayms technology being piloted as a solution.
David Burt, the Premier, said: “Nayms represents a promising blend of digital assets and insurance, which showcases what the future of insurance looks like.
“Bermuda has taken great strides to position itself as an attractive domicile for players like Nayms and it is exciting to see the kinds of new ideas that are being developed.
“The ability to create shared digital rules around traditional insurance contracts are a game-changer for the industry. They allow for increased efficiency and greater market opportunity, which ensures Bermuda continues to play a leading role in the insurance-linked securities market.
“We look forward to welcoming more innovators like Nayms who are showcasing the way digital assets will reshape the core infrastructure of traditional financial services.”
Daniel Roberts, CEO of Nayms, said: “We are very excited to be working with the Bermuda Government, the regulator and the insurance industry on the island, having so far been made to feel very welcome as we begin piloting our solution with the market.
“The BMA’s knowledge and experience in the areas of insurance and digital assets gives us great confidence as we innovate in the space.”
The Nayms team is keen to showcase this platform as a solution to the liquidity problem in the ILS market, where unknown losses after a contract matures leads to capital being “locked up”.
By allowing capital providers to trade in and out of these positions with little frictional cost, capital can be put back to work, leaving a new owner of the initial contract to access returns over a longer time period.
Greg Di Prisco, head of business development at Maker DAO, who will be providing vital technology to this solution with their stablecoin Dai, said: “We’re thrilled to see Nayms accepted into the digital asset sandbox.
“This partnership marks the Dai stablecoin’s first use in the insurance-linked security market and that’s an exciting achievement.”
Richard Chattock, Insurtech Gateway’s CEO said: “We believe in the power of new technology and fresh thinking to solve old problems.
“Well done to the Bermuda Monetary Authority for seeing the need for a transparent trading environment for ILS contracts and paving the way for this exciting pilot.
“Nayms is facilitating a vital stage in the development of the insurance industry as a whole to provide liquidity for investors and insurers.”