Cryptocurrency reinsurer Nayms has launched a retrocessional type of windstorm cover which pays out in stablecoin and could help to rapidly expand the amount of reinsurance available for hurricanes.

That’s the hope of Adam Adamson, the head of business development at the Bermuda-based startup, who spoke to Bermuda:Re+ILS in a video interview.

Adamson says: “The programme is going to insure US named windstorm cover as a form of retro cover for a reinsurance company based in Bermuda that ultimately writes reinsurance to various homeowners and insurers in the US.

“There has been severe dislocation after Hurricane Ian and there’s been a real demand for capacity in that market. We were approached by a cedant who was looking for additional capacity to do this.

“That capital would then be turned into fiat dollars and used to pay the various claims.”

“Through Guy Carpenter as our broker we were able to put together this new and very innovative way to effectively take the US dollar coin sitting in our smart contract and to write these policies against that capital.

“If a claim happens—and we hope it doesn’t because that means a major hurricane has hit the US—that capital would then be turned into fiat dollars and used to pay the various claims.”

The capital amount raised for the policy was relatively small at $500,000 but, Adamson says, the prospects for growth are much bigger.

“Working with the cedant, Prospero Re, and Guy Carpenter was very exciting. If it is successful, at January 1 next year we look to be able to take this particular transaction and multiply it by millions, and hopefully become a major part of helping provide additional capacity to that space.”