AXA’s bold move: How cryptocurrency is transforming the insurance industry
- 29.11.2024
- 403
The world of finance has experienced a significant transformation with the rise of cryptocurrency and blockchain technology.
Traditional institutions and innovative companies alike have begun to explore the potential of digital currencies, adapting to consumers’ and businesses’ evolving preferences alike with the desire for alternative payment methods. This evolution is exemplified by major players like AXA, which has seamlessly integrated crypto payments into its insurance offerings.
In this article we investigate how these significant entities are leveraging cryptocurrency, highlighting their forward-thinking approaches and the implications for the future of the finance and insurance markets.
Crypto insurance
In 2021, AXA Switzerland announced it would allow private customers to pay for insurance premiums using Bitcoin. Europe’s largest insurer said it was making the move in response to a growing desire from consumers to use digital currencies. According to AXA market research, a third of its customers aged between 18 and 55 owned crypto or showed interest in owning crypto in 2019. Life insurance policies are excluded due to regulatory reasons.
In comments carried at the time by Cointelegraph, Claudia Bienentreu, Head of Open Innovation at AXA Switzerland, described taking Bitcoin payments as: “AXA’s response to growing demand from its customers for alternative payment solutions, with new technologies playing an ever-greater role.”
Rather than carrying the cryptocurrency on its balance sheet, the insurer said it would convert digital currency to Swiss francs through broker Bitcoin Suisse. Customers choosing the digital currency option would pay the broker a 1.75% commission when calculating Bitcoin/Swiss franc exchange rates.
During the payment process, the amount owed in Swiss francs is converted into an equivalent amount in Bitcoin based on a specified exchange rate. This exchange rate remains valid for a specific period, preventing customers from experiencing wild exchange rate fluctuations that can sometimes affect cryptocurrency.
Stablecoin transaction
Meanwhile, AXA has also made a pioneering move by completing its first market transaction using stablecoins. Stablecoins, a form of crypto pegged to another currency, commodity or financial instrument, were used by AXA Investment Managers (AXA IM) in a new joint trial in 2023. This innovative step showcases AXA’s forward-thinking approach in the finance world.
The investment was carried out in two steps. Firstly, AXA IM, on behalf of AXA France, purchased €5m of EURCV from FORGE, a digital asset deployed on the Ethereum public blockchain and pegged to the euro.
Secondly, AXA IM invested €5m in a green digital bond issued by Societe Generale as a security token on the Ethereum public blockchain. A security token is an investment instrument giving the holder a right of ownership, transfer of value, or a promise of returns tokenised on a blockchain. The transaction used EURCV stablecoins, which were acquired in phase one.
Laurence Arnold, Head of Innovation Management and Strategic Initiatives at AXA IM, commented: “Following our previous experiments with blockchain technology, we are delighted to have successfully completed our first market transaction using stablecoins.
“The aim of this initiative, carried out in collaboration with Societe Generale-FORGE, was to enable us to experiment the use of a stablecoin as a settlement asset to purchase a digital bond. Our ultimate objective is to optimise our existing processes by adopting the most advanced technologies so we can offer the best possible services to our clients.”
New horizon
The adoption of cryptocurrency by leading institutions like AXA signifies a profound shift in the financial and insurance landscape, merging traditional assets with advanced digital technologies. This integration not only reflects the evolving nature of value, but also opens new avenues for innovation and accessibility in the markets.
Overchain specialises in delivering a rapid, secure and dependable cryptocurrency payment solution across various sectors, enhancing your ability to close deals with greater efficiency. The platform enables the swift and secure processing of high-value transactions without the typical delays associated with traditional banking methods. Additionally, users can seamlessly withdraw, make payments and settle transactions in cryptocurrencies and fiat currencies, leveraging our payment links, widgets and a customisable API for optimal integration.
As we continue to witness the convergence of the physical and digital realms, it becomes evident that cryptocurrency is more than just a fleeting trend; it is a transformative force reshaping our understanding of commerce and finance.
