Millennial-focused insurance startup InsurePal has announced it is raising £15m in an initial coin offering (ICO) to fund its UK motor launch in the first half of 2018.
ICOs are a type of crowdfunding using cryptocurrencies, but they have been criticised by the Financial Conduct Authority as “very high-risk, speculative investments”.
InsurePal uses the ethereum blockchain as a platform for transactions. It claims to offer lower premiums for customers that are able to gain “social proof” endorsements, a system where friends can vouch for each other’s driving with a financial commitment, such as credit card details, as a guarantee.
Guarantors are then rewarded with tokens that can be used for their own discounts, sold or kept as an investment.
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The ICO will close on 16 January, and InsurePal said its motor pilot is set to be followed by schemes for property, casualty, life and health.