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.
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.