More crypto companies getting insured

19 Jul, 2018
by David Borman
News
More crypto companies getting insured

Bloomberg reported today that there is a new branch growing on the tree of insurance: cryptocurrency. More and more individuals, startups, as well as established companies are looking to either get insured or expand their insurance.

Although not entirely new, many see the realm of insuring crypto companies and private investors alike as an exciting new opportunity. Companies already offering coverage include Allianz, which now offers personal coverage, and Marsh & McLennan, which offers coverage to companies. There is also Aon, which claims to have over 50% of the market already.

There are some legitimate concerns in this growing industry. One is that the premiums for such insurance are often extremely high, as much as five times traditional insurance, and policies can have so many exclusions as to make them "close to useless." Another is that there can be huge sums of money at stake, and often it can take many underwriters to cover one claim, just so no single insurer will have to eat the cost in the case of disaster. Tied to this, the volatility of the cryptomarket can be such that the coverage which covered you yesterday may not tomorrow. Most companies currently only have partial coverage. Coinbase, for example, covers only 2% of its coin, just the coin being actively traded. At the time of this article, there have been no known payouts on crypto policy claims to any company.

One more concern is that startup companies could simply lie to their customers about how much coverage they have. Presumably regulations in the future could slow this nefarious practice but cryptocurrency is, again, the "wild west" in its current form.

As this market grows, the insurance industry will certainly find its place amongst crypto. This may be bringing some of crypto out of the "magic internet money" phase and closer to perceived legitimacy, but only time will tell.

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