Crypto industry lacks insurance
Almost $300bn-worth of assets are currently not covered by the market
There is less than 0.5 per cent capacity in the world’s insurance market to cover the value of cryptoassets globally, a new report claims.
Insurers are increasingly aware of a lack of underwriting capabilities in the cryptoasset space, but many are unable to adequately translate the risk for their internal underwriting teams.
Evertas, the world’s first cryptoasset insurance company, estimates the global insurance industry only has capacity of around $1bn to insure cryptoassets. This is despite the fact that the cryptoasset market is currently worth around $300bn.
Evertas says this lack of insurance availability is driven by three factors:
- The relatively small size of the cryptoasset market today compared to other sectors
- A lack of underwriting expertise
- "Blanket" mandates not to write insurance policies in the crypto space.
Underwriting cryptoassets requires an extensive understanding of unique crypto-specific areas. These include private key storage/custody, key generation/management, and blockchain networks, which must be examined with an eye to the unique and specific threat vectors that exist with cryptoassets.
J Gdanski, CEO and founder of Evertas said: “The current cryptoasset market is currently worth around $300 billion and the premium market here is incredibly small when compared to other more mature products.
"This market is too small for large, established carriers to develop and deploy sizeable full-time teams. However, some insurers are ‘dabbling’ in the market to monitor the sector and the premium rates available.”
Some insurers have refused to consider any risk related to cryptoassets and the position is partially driven by early negative stigma associated with cryptocurrencies, he said.
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