UK Insurance Giant Lloyd’s Introduces Hot Wallet Insurance Policy to Cover Crypto Assets
Insurance giant Lloyd’s of London has introduced a new insurance policy to protect cryptocurrency held in online wallets against hacks and theft. A Lloyd’s syndicate – a group of underwriters – known as Atrium has partnered with crypto will-focused firm Coincover to develop the new insurance policy as a response to increasing reports associated with the hacking of crypto accounts.
The New Crypto Hacker Insurance Policy Is A Big Deal
Starting with as little as £1000 ($1,275), the new policies are flexible, decreasing or increasing in line with the price changes of cryptocurrency assets, implying that customers will always be covered for the real market value of their managed assets.
The new policy (i.e., the second insurance cover) is also backed by a number of Lloyd’s underwriters, including Markel and Tokio Marine Kiln, which are members of Lloyd’s Product Innovation Facility (PIF), an initiative focused on speeding up insurance product development for non-standard and complex risk policies.
In June 2019, Lloyd’s of London launched a product innovation facility (PIF) designed for combining innovation and underwriting to insure the uninsurable. Now PIF members, including Markel and TMK (Tokio Marine Kiln), have supported the second insurance product. The first insurance cover is a profit protection policy for hotels introduced in September 2019. Don't use plagiarised sources.Get your custom essay just from $11/page
Trevor Maynard, Head of Innovation at Lloyd’s stated: “As more money flows into the cryptocurrency asset market, losses due to hacking are on the rise. Therefore, there is an increasing demand for insurance that can protect the rising popularity of crypto assets.” He acknowledged that crypto firms keep initiating advanced measures to protect their digital assets from thefts, but once in a while someone hacks the computer systems, and massive loses occur.
David Janczewski, Coincover CEO, is delighted about the establishment of this dynamic insurance cover. He said that the Coincover team is happy to work with Atrium and Lloyd’s PIF members to offer such a timely and unique solution to the crypto asset market. He mentioned that such a dynamic insurance product would protect crypto assets adequately, and hence attract more non-crypto asset holders to the crypto ecosystem.
Formed in 2018, Coincover is providing the insurance policy for crypto assets stored in multi-signature wallets from its partner crypto custodian BitGo to cover against the theft of private keys or third-party hacks. When making a claim, a customer would inform and supply Coincover with some details like what they felt occurred (i.e., lost phones, PC hacked etc.) and fill out a police report. Then Coincover would conduct an investigation of the claim and give payout within 48 hours in case the claim is approved.
Crypto Hackers Get More Sophisticated
According to crypto analytic firm Chainalysis, while crypto exchanges are strengthening their security measures, hacker groups are also advancing their game. In 2019, the numbers of hacks were greater than ever before. The number of successful attacks had almost doubled in 2019, despite efforts by crypto exchanges to ramp up their security measures. The launch of Lloyd’s cryptocurrency product cover, therefore, would significantly play a crucial role in the crypto industry.