Stock market crash creates ‘ripple effect’ for insurtechs

The stock market crash has created a “ripple effect” for insurtechs relying on cryptocurrency stability.

That was according to Lynda Clarke, chief operating officer at fintech Tribe Payments, who spoke to Insurance Times after stocks fell sharply during the first week of August.

The cryptocurrency market became affected, with major currencies like Bitcoin and Ethereum taking a dive as investors sold assets.

And the market in general saw a sharp decline from $2.51trn (£1.97trn) in May to $1.95trn (£1.53trn).

Clarke told Insurance Times: “This volatility highlights the interconnectedness of traditional financial markets and digital assets, creating a ripple effect that impacts fintech and insurtech innovations reliant on cryptocurrency stability.

”This market turbulence can be particularly challenging for fintech and insurtechs as it tightens capital availability and increases investor scrutiny.

“This could impact their ability to fund new tech solutions and scale operations, especially for those heavily reliant on cryptocurrency or blockchain technologies.”

’Heightened caution’

Clarke is responsible for managing Tribe Payments’ commercial, marketing, operational and product output.

She said the downturn in the crypto market “signals a period of heightened caution and strategic reassessment”.

She continued: “Emphasising security, transparency and customer trust will be crucial as these firms adapt to these challenging conditions.

”The current scenario serves as a reminder of the volatility inherent in the crypto space and the importance of a balanced approach to innovation and risk management, particularly for fintech and insurtech companies operating at the intersection of traditional finance and emerging technologies.”

• Insurance Times converted dollar amounts to pound sterling at a conversion rate of £1 = $1.28, as at August 2024.