Insurers Tiptoe into Crypto Insurance Market to Meet Increasing Demand
The growth of cryptocurrencies has led to a greater number of carriers providing insurance to cryptocurrency companies.
Cryptocurrency exchanges have been major targets for hackers, with exchanges losing billions of dollars’ worth of cryptocurrencies to theft in recent years. As a result, many exchanges have started purchasing insurance policies to protect themselves against losses due to hacking and other cybercrimes. The demand for cryptocurrency insurance is expected to continue to grow in the coming years as the industry continues to expand.
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Bitcoin, the first and best-known cryptocurrency, was created in 2009. In the years since, the popularity of cryptocurrencies has grown exponentially, with hundreds of different ones now in circulation. While cryptocurrencies are still largely unregulated, they have been increasingly embraced by both individuals and businesses as a viable alternative to traditional forms of investment.
With increasing interest in insuring cryptocurrencies, more carriers have either started providing insurance to crypto-companies or started forming internal committees to understand the space. Many carriers have begun tailoring their typical commercial policies for crypto-companies, banks, and asset managers. This is because these organizations are handling large amounts of valuable data that need to be protected. By adjusting their policies, carriers can provide the extra coverage that these companies need in order to operate safely and protect their assets.
“In an increasingly digital world, it is important for carriers to be able to adapt their policies to meet the changing needs of their clients,” said Sarah Downey, a blockchain advisory leader at broker Lockton Companies.
Demand now far outstrips as “less than 2% of crypto-related risks are currently insured,” according to Edin Imsirovic, associate director at insurance credit rating agency AM Best. So those willing to sell policies can command rates several times those of traditional coverage.
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