Continuum Founder Rob Russell // Web3 Accountant Radio Ep11 Transcript
Rob Russell is the Founder of Continuum
Continuum is a new boutique risk and insurance advisory firm operating in Asia focused on helping businesses that are involved in Web 3.0 and emerging technology industry.
In this conversation, we dive into:
1. Deep Dive into Web3 Insurance
2. Insurance claims and what to do during an incident
3. Defi Insurance
4. How to select insurance firms
5. Why did Rob decide to enter the Web3 space?
6. What is Rob looking forward to in the Web3 space?
And more!
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Connect with Rob & Continuum 👇
Linkedin: / rob-russell-continuum/
Website: https://www.continuuminsure.com/
Email: [email protected]
Hello everyone, welcome to the Web3 Accountant Radio, the podcast where we dive into the fascinating world of Web3 finance and compliance. I’m today’s host Diana, and my partner is Wei Xiang. Hello Wei Xiang.
Hi Diana, today we have a very interesting guest, Rob, he is an expert in insurance for Web3 and in the last few months he has been travelling all around the world to different Web3 conventions and I think he will be able to give us a very detailed insights into Web3 insurance, something that a CFO, COO or even CEO maybe in the regulated space or unregulated space would deeply have to look into. Yeah, welcome Rob Russel. Rob Russel is the founder and director of Continuum, a boutique risk and insurance advisory firm operating in Asia focused on helping businesses that are involved in Web3 and emerging technology industry.
Rob started Continuum on the back of a 17-year career in insurance, working for major corporate insurance brokers in Asia where he focused on advising on and sourcing insurance to cover banks from custodian to professional advisory firms. He also worked with accountants to protect them from a variety of financial risks including regulatory, contractual, cyber crime and liability. In 2017, Rob started to get involved in the Web3 space working with various firms looking to get insurance too and saw the huge gap between the client demand and supply from the insurance market.
Welcome Rob. Thank you. Thank you guys and thank you for having me on today’s podcast.
So I think as I’ve just introduced me, I’ll just give you a bit of background in terms of why I’ve entered this space. So as Diana said, I’ve been in insurance and in Asia. I’ve been in Asia for about 20 years and started my insurance career in 2007.
So always predominantly worked with financial institutions, funds, the business industry, effectively for corporate insurance. And I think it was really back in 2017, with all the hype around ICOs, obviously the bull run in the crypto market at that time, when some companies started approaching the company I was working for at the time, asking about insurance options. And a lot of it was driven by the fact that some companies were looking to enter the space.
And after discussions with the existing insurance companies, they’re realizing that they won’t be able to get coverage or there will be an exclusion for crypto related or digital asset related exposure. So we started then obviously looking at this opportunity. Firstly, trying to understand what companies are trying to do, whether or not it is a custodian or is a fund or is a platform.
And obviously things have evolved very quickly. And things have changed as well during that time. So we then started talking to insurance companies and talking to various different insurers around the globe, not just within Asia, who could provide some of that coverage.
So it kind of dawned on us at the time or dawned on me at that particular time that, there’s obviously a big gap between these companies looking for particular areas of insurance coverage to either protect their company, protect their assets, protect their client assets. And now more subsequently to do regulation, to do with contractual requirements, as things have changed, there was a big gap between the supply side, i.e. the insurance market and what they did, and the demand from these types of industries. So that’s really how I started to get involved.
And then subsequently, I decided to set up Continuum last year, 2023, to really focus on this space, because it’s becoming more and more of a need and more and more of an opportunity. Oh, thank you, Rob. So maybe we can get the ball rolling.
I think just a very quick question that I have for you is, in terms of insurance, you have been in the space for a few years for the Web3 site, almost 10 years. Have you ever had a client claim, like, after they buy the insurance and then they make a claim and then just to start the ball rolling? Yes, yes, I have. So one of the first claims, I’ve had various claims, some have been, some have not gone anywhere.
Some have actually eventuated in an actual loss or an actual claim on the insurance policy. So the main one I was involved with, I think, probably about a year after placing one of the first policies, was from a custody perspective. So it was actually a client who was involved in custody, and they had a loss.
And so we effectively had to try to understand and find out what happened. And on the back of that, we worked with the insurers and then the investigators to try to sort of understand what happened to the funds and whether or not they could be covered. So yeah, so I think, obviously, a lot of these things are confidential, naturally, in respect of, who the client is and what happened.
But it was interesting to go through the process in order to firstly understand what, what effectively could go wrong, and then effectively how things respond once a loss has actually happened in terms of recovery, in terms of investigation, in terms of the legal liability, and that type of thing. So yeah, so I have been involved. There’s not been too many compared to maybe some other areas of claims.
So that gives a testament to the Web3 space in many respects, because one thing I do find is that companies are very transparent in terms of what they’re doing, in terms of how they’re set up, in terms, they’re trying to build credibility, and insurance is always seen as part of that process as well. Nice. So the other questions that I have for you at the start of this conversation is, when a company realized that they have maybe lost a bit of their crypto assets after they have bought the insurance, at which stage should they contact the insurer? So I’m quite sure they will have to contact lawyers, they’ll have to contact the police, they will have to contact different people.
So for insurance, is it like the first number to dial? Or like, where does it go? Because I realized after having conversations with different people, insurance plays a very important part when you lose your assets, especially when you have bought it. Yeah, well, I think there’s no, there’s no definite answer in terms of who to contact first. But I mean, as prudent as possible, because it’s just part of that same process.
And it depends on the policy, because some policies will give you access to third parties that can help you like in forensic investigation. And in order for those costs to be covered, we’ve also got to notify the insurer to make sure that they’re happy to cover those costs, things like that. And some of this can be pre-agreed.
So there’s, in event of a, event of a loss happening, it happens very quickly, right? So we want to make sure that everything’s set up to react quickly. So from that perspective, that’s why we tend to work with companies in terms of when we set up the policy when they buy the policy, to make sure it’s very clear of what the process is in the event of a claim. But obviously, in some circumstances, of course, the most important thing is to is to engage with those service providers that can help you try to track or, mitigate the loss, so to speak.
But the insurance, obviously, if you are insured, you need to obviously notify as well to make sure obviously, then any of those costs that are incurred can be covered by the insurance if if that’s what the policy is set out to do. Thank you, Rob. So that is where I think it’s very important to work with somebody who is very experienced and somebody who have a wide range of insurance firms.
So there’s Rob. So maybe Rob, after these two quick questions, you can bring us through a little into Web3 insurance. Yeah.
Yeah, sure. So maybe I’ll just sort of share my screen just just quickly, just give you a bit more background. So what we effectively set up to focus on, so we do focus a lot on crypto and Web3, but we obviously do more broadly emerging tech as well.
So this is really because obviously, clients tend to spring off from different areas. And there’s this cross fertilization between different types of industries. But the main products that we effectively do for the Web3 industry are these ones set out here.
And the four main ones is tends to be either driven by regulation or driven by contract or just driven by obviously protecting assets, the ones on the right hand side. So that’s your professional indemnity or professional liability, cyber insurance, the theft, crime, theft of theft of assets, cyber insurance, and the directors and officers liability. So they’re the ones that we tend to focus on.
In some respects, these are the products that are already established by the insurance market for the traditional trad-fi industries. So they’re really sort of seeing how we can fit them in with the Web3 space. We do also work with some of the mutual companies as well that provide indemnity or customized cover people like Nexus Mutual, for example, to be able to to provide coverage for particular risks.
Now, they don’t always suit some companies, because if there’s a regulatory requirement, like the MAS may want something in place or, or in Dubai or in Hong Kong in terms of the regulations, right in terms of getting the licenses, that may not be the best option. So we do work with regulated insurers, lawyers of London insurers, good long experience insurers to try to fulfill that need. But as I mentioned at the start, we did find out very quickly, there is quite a big gap.
And importantly, there’s a lot of insurance companies out there that provide this type of coverage. But not all of them want to get involved in the Web3 space. And in fact, quite a few of them, say very clearly that they have exclusion around Web3 or crypto.
So this is starting to change, as obviously, the industry is maturing and developing. And obviously, there’s more, more money coming into it with the ETS being approved, that type of thing. But these are the core things that we that we tend to focus on.
So I’ll just also just, these are the types of companies that we work with. And then really from a, what’s the benefits to companies I’ve already mentioned, asset protection, protection, protection, funds protection, protecting your assets is the regulatory compliance angle that we often engage with companies around. And that obviously changes depending on the jurisdiction, depending on the regulation, obviously, regulations are coming out all the time in respect of the Web3 space.
So we have to look at what the regulation is asking for. There’s obviously, there could be added value to your clients being insured versus not being insured. It could give your client more confidence, many of the early companies we worked with, they’re obviously trying to go through the process of getting licensed, getting audited, getting, all the things in place, and insurance can be part of that, so in your insured company.
And it can also offer potentially an additional revenue stream as well, because you can potentially then on sale insurance products to your client base, and to help them give another level of protection at the same time. So, this is where we see the main benefits, there may be others as well. But effectively, what we do with companies is obviously, from the very start is look at what is their main driver around the insurance conversation? Is it are you coming to us because you’ve been told to buy by a regulator or by a contract? Are you looking at it longer term in terms of adding value? Are you looking in terms of protecting your assets, so it depends on the driver, so to speak.
So that gives you a bit of a summary in terms of what we do and what we work with clients about. Thank you, Rob. Rob, can we, I wanted to stop the screen at the previous slide, which you skipped past very quickly on who actually come to you, because I did glance through the slide very quickly.
And I think it’s very informative. Can we leave it there as we discuss a few other questions? Yeah, this is the one where I think this is a kind of nice overview of the ecosystem or the landscape where we talk about the different digital asset players which require crypto. To be honest with insurance itself, as I do this podcast with other service providers itself, maybe for payments or for cards, crypto card services, I’ve been hearing that at least in the last six months compared to previously where they are starting to say, oh, we take care of security, we are offering insurance for our customers as a way to, when I hear you mentioned the additional revenue or branding.
Yeah, I think, and also with many players starting to issue their own crypto corporate cards or payment channels as this space evolved. I think insurance is a is a quite a pretty important branding or a necessity to have. Yeah, for sure.
I mean, one interesting thing is that when we started working in particular with the custodians, one of the key things I think, at the time for them was partly, yes, we see as an extra layer of protection, given the fact that the custodians role is to keep the assets safe, right. So obviously, they’ve got to be super secure, in order to have a business model, a viable business model. But I think, the insurance conversation was always around, you’ve got to have a business model, you’ve got to have a viable business model.
But I think, the insurance conversation was always around, you’ve got to have a business model, you’ve got to have a viable business model, could this add another layer of protection? But also, how can we use this from a from a marketing perspective, quite frankly, there was a bit of a in the US, in particular, there was a bit of a competition between various large custodians and who could buy the most insurance, and who could advertise to have the most insurance, right.
So in that sense, it’s quite unique, because normally insurers, we don’t normally advertise when we’re insured, right, it’s a bit of a what’s called moral hazard. it’s like keeping your window open, keeping your door window open to invite the burger inside, right. So in that sense, there’s some careful discussions with very, the underwriters to craft what’s the right message to be sending people in terms of what you’re insured for, making sure there’s no confusing message, but ultimately allowing them for the customer or the clients to have a sense of confidence that you’re the you’re the not just a regulated institution, for example, but you also the insured institution.
And that gives people extra confidence. And I think the the hope was as well, and it hasn’t necessarily materialised, just because I think there’s been obvious changes in the market, that the insurance would also be allowed to be kind of, on sold as a value add to the customers as well. So if you’re, if you’re working with, let’s say, a custodian or an exchange, and you’re putting significant amount of assets with those companies, that you could potentially ring fences and ensure your own assets as part of that setup.
So that’s something which is possible for sure. But something I think it’s worked in some places and some companies, but sometimes it maybe it’s not readily available, or hasn’t really been seen as a something which is taken off just as just quite yet. Yeah, thank you, Rob.
So the other one that we maybe we need to get insights from you, what is your thoughts on Web3 insurance? I’ve heard a little bit, especially from your articles on, Continuum do produce a lot of insurance articles, related content, which I love and I share, because there’s a lot of information inside. So do check it out. And the other one is on Web3 insurance, compared to working with traditional brokers, they are talking about decentralized insurance.
I’m not sure what’s your thoughts on that, that area? Yeah, I mean, obviously, a bit like, the Web3 space in general, right, the allows a lower barrier of entry for certain things. Now, insurance has always been a heavily regulated industry in many jurisdictions around the world, it’s sometimes quite difficult to enter that space without significant amounts of capital and various other requirements. So with the Web3 industry, there has been the opportunity for new players to sort of set up, some of them on the back of others, but also there’s completely new players who are offering different types of decentralized type products, DeFi products, to protect against specific things like staking in terms of protocol, hacking protocol damage.
So, I think this is great, because obviously allows companies or consumers to have more options. But there is also some sort of, again, when it comes down to what’s the real driver, because if the driver is, let’s say, for example, the regulatory requirement, there may be certain specific requirements around what type of insurer, what’s their credit rating, for example, which is obviously a gauge of their ability to pay claims, how much reserves do they have, where they’re from, how long they’ve been operating, that type of thing. So that sometimes precludes some of the newer players, right, in terms of those that have set up in more recent years to try to fulfill the need.
But at the same time, at Continuum, we work with both, we’ve been working quite a lot with, Realm, for example, that are based out of Bermuda, some of the Lloyds Marks in London, some of the newer players like Qubit or OneDegree, so it’s because they’re providing an option and a choice. And in some circumstances, whilst people might want to use a traditional name or somebody with a long history, simply they just don’t have the have the option around coverage. So again, it depends on what your trigger is, what your driver is in terms of what insurance policy you’re trying to get, and whether or not you’re comfortable with just getting anything, or you want to get something which is, again, with a history and a name behind it.
It just really depends on, again, your driver. Thank you, Rob, for sharing on Web3 insurance. I think one thing I hear is about jurisdiction, and also I think time tested is very important, because when you work with traditional insurance firms, you might be having deeper wallets, deeper backing because of their reserves itself.
So maybe one last question for the professional side of things is, for the senior management, the C-suite, when they actually make the decision on which insurance to buy, do you have some comments on, I mean, you have shared a lot on the different factors to look out for, and how they are to look for it. Do you have like one or two highlights that I can put up, or they can take away briefly? Sure. So I think obviously, when we’re talking to, and it does obviously depend on the type of company, what stage they are in their development.
as I always say, insurance is a cost. Nobody really wants to come and spend money on something you may never use, right? But again, sometimes the driver can be different. So I think it’s a balance between the cost, effectively, that’s one of the first questions, how much is this going to cost me for the amount I’m going to buy? So it’s a balance between that, looking at effectively the excess of the deductible, the amount that you would pay before the policy kicks in is important as well.
Looking at the actual coverage more specifically, because sometimes there may be a certain exclusion that, could preclude you claiming, should that arise, it may tick the box in terms of many other things in terms of cost, in terms of coverage, but it may, so looking at the exclusions and working with a broker that understands and can explain what that means is really important. And also, I think, again, the comfort level around, who the insurer is, their track record in terms of paying claims, the service part of it as well. So, you might want to, you might take something out now, but, next year, you want to get the renewal terms, if it’s difficult, and importantly, from a claims perspective, if they’ve got, a history and information about how to handle claims as well.
So I think all of these factors lead to, the help, the decision making. But again, it does come back down to what is your, what is your key driver? And effectively, to what extent are you looking at it purely to tick a box? Or are you looking actually, can it help you in the event of something going wrong? As a risk management, I think one thing is people who are trying to get a license in Hong Kong would definitely need, this is, insurance happens to be a mandatory requirement for anybody who wants to get a license in Hong Kong. And as of now, there’s still about 10 players trying to get a license and a regulatory sandbox in Hong Kong for the stablecoins itself.
It’s also making the whole insurance space very exciting. Yeah.
No, I agree. I mean, we, we also say to people as well, is that, we can quite easily, I’d say, get, get to a point where we can provide you quite quick pricing terms coverage. But obviously, there’s no commitment from either side then to help with that license process, because, you want to know it’s available, you want to know that how much it costs, you want to be able to put something in your license, whether or not the regulator actually wants to see the policy bought.
That’s a different thing, because obviously, it depends on the timing. you don’t necessarily want to go and spend a lot of money on this thing. And then the license is still outstanding anyway.
So we work with companies to try to align that those expectations as well. Because, again, you don’t want to be necessarily paying for something upfront that you don’t need quite yet, with all the other costs involved in the business. But our role is to be able to, to explain to you what is actually available, effectively, how much roughly is going to cost depending on and then effectively, it’s exchange of information, underwriting information to get it from that point into starting the policy.
Thank you, Rob. So I think you have shared a lot, including the personal part of it inside your sharing itself. So one last personal question that I have for you would be, what are you looking forward to in the Web3 space? Like, we shared about what is happening now, we shared about what people should do, what they should know, and how you got in.
But so what’s next? What do you think? Are you looking forward to? I think, there’s a big opportunity here. I mean, I think the insurance industry has a big opportunity, naturally, right, in terms of providing protection, providing coverage, providing new solutions to an emerging industry, which is obviously growing and changing all the time. So I think in terms of a, let’s say, a new revenue stream for these companies that traditionally cover lots of different types of emerging risks in the past, whether or not it’s agriculture, whether or not it’s storms, all the traditional sort of perils we see in the world.
So first, I think there’s a big opportunity, and I’m looking forward to being part of that big opportunity. I also think there’s obviously a lot of work to be done between, the on-chain and off-chain environment. there’s a lot of sophisticated things happening in terms of the on-chain environment, in terms of, the companies that help them to track funds to monitor what’s going on the blockchain, from a regulatory compliance perspective and all that sort of thing, the guys that you’re doing from an accountancy perspective too.
So I think from an insurance perspective, we’ve got to do a lot of work. And the key thing really is to help the industry understand what’s going on, the more information, the better. So, just the other day, I was talking to one company about, trying to build up this data set to help not only with the underwriting in terms of understanding what the exposure is, but also in the event of a claim happening to be able to better be able to track and understand what to do in the event of a claim.
So there’s a whole lot of, I’m looking forward to sort of doing a whole lot of work around that area of things. it’s a challenge and it takes time and it takes, the insurance community as a whole to come together to be able to do this. But I think there’s, there’s a lot more compared to, let’s say, back in 2017, when I first got involved, and there’s been a lot of advances in that aspect.
And I’m looking forward to kind of working more on that as well in the future. Thank you, Rob. So the last one that I have is, I’m not sure whether it’s comfortable for you to share or maybe in privacy issue is like, what would you want to mention some of the clients that Continuum has worked with, like in the Web3 legalized license space? Yeah, unfortunately, if I’d got some approval before the podcast, I could probably share to you, but I do need to keep client confidentiality.
I normally, we can ask them that it’s okay to share. But at this stage, at this moment, I can’t unfortunately, not on the podcast. Yeah, they range that effectively, there’s some big names in that in what you see on the screen.
I think that’s one of the key things. And the largest one is a is a tech provider, I do work with exchanges, I do work with funds and platforms. And most of is a few that are not, but most of them are either Singapore, Hong Kong or Taiwan based.
Thank you, Rob. So I do I do know Rob, and I know that he has been working in this area. But sadly, due to privacy issue, we couldn’t disclose it.
But yes, if you need insurance, do look for Rob. Diana and Rob, do you have anything to add before we conclude the session? No, I think just to say thank you for the for the time and the exposure. If any of the Web3 accountant, community, I’ve got any questions, I’d like to reach out everything of no obligation.
I don’t expect to be pushing you to buy insurance, it is purely on advisory basis. And yeah, happy to share other stuff offline with people individually as well. No problem.
Okay, thank you very much. And maybe it’s time to move to the free talk session. And the first question is that I’m very curious about why we finished the session.
Oh, no, Thanks.
Thank you. I have no other questions. Yeah.
Okay. Thank you. Okay.
Thank you.
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