Several industry insiders have opened up about the hush business of cryptocurrency insurance, but they are not sharing much, and many more aren’t sharing anything at all.
Substantial premiums are attracting the most prominent providers.
While they may not want their names attached to cryptocurrency insurance, AIG, Chubb and XL Group have all been proving insurance for stolen assets. With the blockchain industry exploding, and Bitcoin gaining more mainstream acceptance in its wake, insurance companies are betting the substantial premiums of protecting digital assets may outweigh the potential costs. By capitalizing on the crypto industry’s arguably undeserved ‘bad reputation,’ underwriters are reportedly charging business five times more and beyond for coverage.
Although the costs are far beyond what most start-ups can afford to pay, the two leading insurance brokers servicing the industry, Marsh & McLennan and Aon, have reported recent service as fast-paced. Marsh has even expanded blockchain start-up services to a team of ten individuals working solely on these cases. Aon has also adjusted their standard policy form, with several other companies streamlining policies to cater to the specific requirements of cryptocurrency protections.
Why are they keeping their policies quiet?
There are several factors keeping insurers from promoting their crypto premiums. As the cryptocurrency market is expanding, unsurprisingly the number of hacks taking place has also. For insurance providers, however, the bad press can be extremely harmful to their reputation. While those inside the company may know it makes financial sense to provide crypto-related businesses premiums, clients looking to employ their services may not see it this way.
On top of this, insurance companies are concerned their policies might be overstated by their crypto-industry clients; having their name advertised as insurers may be inaccurate or misleading in terms of what their premiums actually provide.
Business to business, however, crypto-related insurance seekers have experienced a change in their treatment. Crypto services provider BitGo noted they received meetings with 75 different insurance providers in London, New York, and Bermuda. CEO Mike Belshe confirmed that the meetings were substantive, saying: “They aren’t just kicking the tires. They are asking very specific questions so they can assess the risks.”
Insurance for the future perhaps.
While the insurance policies currently on offer are wildly expensive compared to their counterparts in traditional financial services, like any industry, the more the demand for premiums increases, the more insurers will come to offer services and drive costs down.
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