Crypto Insurance Business Heating Up As Hackers Get Savvier

Cyber insurance became the fastest growing type of insurance in the U.S., becoming a multi-billion market in 2017.

One of the main things that keeps potential crypto investors at bay is the threat that they could lose their tokens to theft, fraud or hacks.

A solution that is picking up steam in the crypto world is crypto insurance. While the idea is not exactly new, recent dubious actions have put this type of protection squarely back in the news.

Let’s discuss.

Hackers seem to be the main reason among the ways that investors have been losing money in the crypto sector. As the industry has grown, individuals seem to have become savvier in their abilities to tap into exchanges.

Just think Mt. Gox.

And then there are the recent hacks we reported involving Bithumb and Coinrail that happened within weeks of each other. Also, there was Bitfinex.

Reports say that in 2017, cyber insurance became the fastest growing type of insurance in the U.S., becoming a multi-billion market. Bloomberg reports that 2018 is on track to be the busiest year for hacking activity.

It’ll cost you

Insurance companies may be stepping in to provide protection for crypto investors, but you should be on notice that it’s going to cost you – considerably.

Bloomberg reports that premiums can reach 5% of the annual coverage limits.

Who’s willing to take on the risk?

Companies in the insurance sector have recognized that these hacking events offer opportunities to provide their services. Furthermore, there’s considerable money to be made in insuring these new-fangled cryptos.

Allianz is one such insurer that is recognizing the monetary benefits of entering the space, despite the risks. It began offering individual coverage for digital-coin theft this year.

To Bloomberg, Allianz spokesperson Christian Weishuber said insurance for cryptocurrency storage will continue to provide big opportunities.

He added:

“Digital assets are becoming more relevant, important and prevalent on the real economy and we are exploring product and coverage options in this area.”

In addition to Allianz, there are some larger players that have entered the game. They include AIG, Chubb, Mitsui Sumitomo Insurance and XL Group.

Even the world’s oldest insurer, Lloyd’s of London, could be getting ready to embrace the business. It reportedly put out a notice for its agents to be on guard when it comes to cryptos.

In a bulletin, its agents have been asked to “proceed with a level of caution that recognizes the risks,” Bloomberg reported.

Observers of insurers willing to take on this high-risk world note that some of their willingness stems from cryptos being more accepted by the mainstream. As their anxieties wan, clearly it could do the sector some good, as far as helping people become even more accepting of it.

Lastly, it could be just one more thing to help settle some of the space’s volatility.