Risk Insider: Martin Eveleigh

Mt. Gox Investors Lost Millions in Bitcoin. Captive Insurance May Mitigate Future Losses

By: | September 28, 2018 • 2 min read

Martin Eveleigh is Chairman of Atlas Insurance Management, which he formed in 2002. He specializes in designing alternative risk transfer programs – particularly risk pools – and captive structures. He can be reached at [email protected]

Cryptocurrency has been an important topic for captive insurance companies as of late. Public attention to cryptocurrencies, such as Bitcoin, tends to focus on the extraordinary rise in their value and the potential investment opportunities, in addition to (lack of) investment risks. However, cryptocurrencies cannot be dissociated from the blockchain technology that creates them, making both the currencies and the blockchain itself subject to risks that go well beyond investment risk.

When broken down, a blockchain is a distributed ledger of transactions made on a network which adheres to a protocol for communication between participating nodes and the validation of new blocks without the control of a central authority. So far, all such transactions are considered immutable, irreversible and therefore invulnerable to fraud.

Knowing these facts, one should ask: If the blockchain is so secure, what risks are there in issuing, owning and storing digital currencies? And how will we deal with those risks?

As ever with emerging risks, there are knowns and unknowns with cryptocurrencies. At this stage in the development of the blockchain universe, the unknowns greatly outnumber the knowns.

As ever with emerging risks, there are knowns and unknowns with cryptocurrencies. At this stage in the development of the blockchain universe, the unknowns greatly outnumber the knowns.

One unknown is the question of legal liability. Conventional value-transfer transactions take place through an intermediary, such as a bank or broker, in other words through an identifiable and accountable legal entity.


Blockchain transactions take place without an intermediary on a network potentially comprising hundreds if not thousands of nodes spread around the globe. Where is the identifiable legal entity? What was once the legal liability or third-party risk of the intermediary now looks very much like the first-party risk of the transacting party, and one which should perhaps be insured as such.

While the Bitcoin blockchain is considered to be unhacked up to now, the same cannot be said of the cryptocurrency exchanges. Bitfinex and Coinbase have been targeted, with a loss in the case of the Bitfinex breach of $72 million in Bitcoins.

A bigger loss was the disappearance of 850,000 bitcoins from the Mt. Gox exchange that filed for bankruptcy in Japan in 2014. At the time, those coins were worth $500 million. Storage of cryptocurrency also presents a security risk. Coins can be stored in two types of wallets: hot (connected to the internet) or cold (not connected). The first may be susceptible to hacking while the second is a physical device and thus shares risk characteristics with money stuffed under the mattress.

The commercial insurance market is sure to be relatively slow to respond to the emerging risks associated with cryptocurrency. That is very likely to mean that the financing of the risks that are insurable will be by captive insurance companies, where many aspects of insurance coverage, terms and conditions will be developed.

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.


That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.


Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]