InsurAce, the insurance protocol for DeFi, took heat from the community after suddenly shortening its claims periods for Terra-related insurance cases. However, it is now set to pay $11 million to claimants.
InsurAce, the insurance protocol for DeFi, stated that it was within its rights to reduce claims periods for Terra USD (UST-related) victims from 15 to 7 days. However, it added that it had already processed almost all 173 claims and will pay $11 million.
With a market capital of $15 million, InsurAce (INSUR), is the third-largest insurance provider for Decentralized Finance (DeFi), protocols.
InsurAce made a splash on May 13th when it declared that it would shorten the claims window for those who have cover related to Anchor (ANC), Mirror(MIR) and stablecoin Terra USD USD (UST) after the collapseof the Terra ( LUNA). Layer-1 blockchain.
Cointelegraph was told Thursday by Dan Thomson, CMO, that the company’s decision to reduce the claims window for Terra portfolio covers 234 was necessary to avoid further losses. UST had fallen to $0.08 on May 13, according CoinGecko. He also said:
“We have to change our terms of service in order to do so. We felt it was unnecessary to delay the process for those who have lost money or stakers who would need to pay claims.
Some in the crypto community were skeptical of InsurAce’s move, believing it was trying to lower the number of claims it would have pay. FatMan , a Terra Research Forum member, told 52,000 of his Twitter followers that InsurAce had made “a dirty move” and that the firm shouldn’t try to “weasel out” of its contract with clients.
Thomson stated that, except for those rejected claims, the majority of 173 submitted claims have been processed and that the protocol was prepared to pay approximately $11 million to claimants. Thomson added that he was confident in his assertions.
“We want the best possible for everyone here. But if this was traditional insurance, people might be stuck in litigation for months, or even years.”
Thomson suggested that Thomson may also suggest that the protocol might consider processing claims for the remaining 60 covers that have not been filed yet.
Regulators around the world have been paying attention to the collapse of Terra and UST. The legendary South Korean financial crime unit, the “Grim Reapers of Yeouido”, was resurrected to find out if any crimes were committed by Kwon or Luna Foundation Guard (LFG), which managed Terra’s funds.
Thomson suggested that InsurAce might also be able to sue Thomson in the event that the UST depegging was more than a protocol failure. He said, however, that Terra and LFG had bigger fish to fry so that was a bridge we would cross once we reach it.
INSUR has fallen 7.6% in the past 24 hours and is currently trading at $0.28 according CoinGecko.