First it was banks appearing in the metaverse, now it’s insurance companies.
IMA Financial Group, a large U.S. insurance broker and wealth management firm, is opening a research and development facility in Decentraland, the Ethereum-based virtual world where Wall Street mega-bank JPMorgan recently set up shop.
Denver-based IMA’s foray into the metaverse, dubbed “Web3Labs,” was driven by the rapid growth of the non-fungible token (NFT) market, said Justin Jacobs, senior VP of marketing at IMA Financial Group and architect of Web3Labs.
“We have this huge asset class worth over $40 billion, for which there’s no traditional insurance products,” Jacobs said in an interview with CoinDesk, referring to 2021 research from Chainalysis. “Many NFTs I think would be considered some form of art, and today we transact a ton of business in the realm of specie insurance; fine art, collectibles, things of that nature.”
The crypto insurance question
Insurance and cryptocurrency have thus far been uneasy bedfellows, with spotty cover and a dearth of capacity, limited to a handful of blue-chip exchanges and custodians.
As far as the nuts and bolts of digital asset insurance are concerned, specialist underwriters from Lloyd’s of London working in specie insurance market (policies covering high-value items like gold bullion and works of art held in safe storage facilities) have turned their attention to cryptocurrency locked up in cold storage.
IMA, which is one of the largest private and employee-owned brokers in the U.S. with predicted revenues this year of around $500 million, has connections with Lloyd’s syndicates for some of its business lines, said Jacobs. But for now, there are no insurance products directed at things like NFTs, he said.
Metaverse value chain
As well as simply having a presence in Decentraland, IMA wants to explore the entire metaverse value chain, Jacobs said, including being able to advise clients that might be apprehensive when it comes to things like decentralized finance (DeFi).
As such, crypto, NFTs and the metaverse can be compared to the burgeoning cannabis industry in the U.S., he said, where relatively recently firms were fearful to tread, but which now happens to be a sector where IMA manages a significant book of business.
IMA’s Web3Labs opens with interactive material and content, as well as a tranche of NFTs the firm will be minting, but the hope is to create a location where transactions – such as negotiating insurance cover for an NFT somebody is thinking of purchasing, for example – can take place.
“I absolutely believe we are quickly approaching an inflection point,” IMA executive Paul Washington said in an interview. “There’s of course a big focus on asset building in the metaverse, which needs to be considered from a risk mitigation standpoint, no question.”