Insurance Providers Gear Up To Capture The Cryptocurrency Market

This year the cryptocurrency market witnessed a lot of exchange hacks losing millions of dollars’ worth digital assets stored in customers wallet. Finding an opportunity in this, big giants of the insurance industry are now gearing up and flexing their muscles to provide insurance on cryptocurrency storages to exchanges and individuals.

According to the latest report from Bloomberg, big giants like Allianz, AIB, Chubb and XL Group have started providing coverage options to businesses in the cryptocurrency space. With a wider acceptance of digital currencies and the cryptocurrency market growing more mature, insurers are willing to take the risks to avoid the pitfalls. Allianz has already started providing individual coverage on cryptocurrency thefts since last year.

While talking to Bloomberg, an Allianz spokesperson said: “Insurance for cryptocurrency storage will be a big opportunity. Digital assets are becoming more relevant, important and prevalent on the real economy and we are exploring product and coverage options in this area.”

However, it has to be noted that the premium of such insurance will be substantially higher weighing the risks and volatility the crypto market has to offer. The report mentions that the premium is likely to cost five-fold in comparison to the existing corporate insurances and will be 5% of the annual coverage limits.

Two other leading insurance brokers who help the companies to select the best crypto policy, Aon and Marsh & McLennan said that business has been pumping this year. Marsh & McLennan has also formed a 10-member dedicated team to serve the blockchain startups.

Aon claims to have already captured 50% of the crypto-insurance-market and has also tweaked its standard policy to speed up the underwriting process. Underwriters like Chubb and XL Group and a dozen others have already started to provide coverage to crypto-related businesses. However, Chubb has made it clear that it won’t underwrite insurance for crypto exchanges and wallets. The XL Group also said that it is “being careful when looking at those risks and analyzing them on a case by case basis.”

Another insurance giant American International Group has confirmed that the company has been met with several crypto platforms and trading exchanges about coverage protection.

However, with the crypto insurance coming in place, experts worry that might lie the investors by overstating the amount of crypto insurance they provide.

“Quite honestly, it’s something insurers are aware of and cautious about too, They don’t want an advertisement to say, ‘We are insured with ABC insurance company’ and for it to be inaccurate or misleading. It’s definitely a concern,” said Jackie Quintal, Aon’s practice leader for financial institutions.