Crypto industry participants are seeking insurance or protection against the volatile domain’s risks. As a result, there is an unprecedented rise in the demand for crypto insurance policies. This need has been gaining attention only after the prolonged crypto winter as several investors and companies lost massive amounts of funds.
In the past few months, crypto lending companies like Celsius, Three Arrows Capital, and Voyager Digital, faced the wrath of crypto winter as they went bankrupt and 3AC even ceased operating. Thereafter, crypto exchanges like Nuri and Coinflex also faced some similar issues wherein the former filed for insolvency and the latter considered restructuring. Therefore, a host of companies in the same domain fear such risks and have been seeking crypto insurance policies for minimizing the possibility of exorbitant losses. Insuring companies are stunned to see such a spurt in demand for these policies.
What Do Insurers Say About Crypto Insurance Policies’ Demand?
The Director at insurance broker company Marsh McLennan, Jackie Quintal, commented on the surge of demand for crypto insurance policies saying:
“We’re seeing crypto risk and coverage inquiries from all kinds of companies. Crypto is popping up all across financial services, tech, fintech, and other parts of the economy.”
Associate Director Of The Insurance Credit Rating Agency AM Best, Edin Imsirovic, said that the demand for crypto insurance policies surpasses the supply by large as only 2% of the crypto domain risks are currently insured. He then added that the jones who are providing such policies might even control the policy rates around the domain due to the limited availability of these policies.
The spokesperson of broker Lockton Companies Inc, Sarah Downey, said that insurers have now “definitely increased their appetite” to tackle crypto-related risks. She explained the situation citing the changes in last year saying:
“Especially within the last year, more carriers have either started providing insurance to crypto companies or formed internal committees to understand the space.”
Crypto insurance policies have not been developed enough and that is the reason why a host of investors and companies involved in crypto trading are fighting for the limited resources. One of the insurer company insiders mentioned that refusing to provide such policies has been becoming a “difficult position to maintain for insurers that want to keep their renewal book.” Therefore, insurers are trying their best in upscaling their services for a better experience for those who are undertaking high risks in the volatile crypto market.