Cryptocurrency Insurance in the UK
Lloyd’s trade union Atrium in cooperation with Coincover has developed the first category of liability policy with adjustable limits amounting to £1.000 to safeguard against damages resulting from theft of hot online cryptocurrency.
It is a new type of liability insurance policy with an increasing or decreasing dynamic limit in line with crypto-assets price movements. This means that, even when these changes over the policy duration, the insuree will always be compensated for the underlying worth of its managed asset.
The policy is supported by a panel at Lloyd’s other insurers which includes the Lloyd product innovation facility TMK and Markel (PIF).
The facility is a significant step towards creating a marketplace that will offer a better value to clients with highly responsive and advanced risks management products and services, as part of Lloyd’s ambitions to be the world’s most customer-centric digital insurance platform.
This is the second new insurance product supported in recent months by PIF members. The first was launched in September 2019, with a profit protection guarantee for hotels with a unique event trigger.
Key Takeaways
• Lloyd of London establishes itself as the no. 1 cryptocurrency insurer in the U.K.
• Binance lost $40 million in May 2019 to hackers due to a security breach.
• Cryptocurrency Insurance is needed now more than ever to minimize the risks of cryptocurrency hacks and thefts.
An underwriter Atrium, Matthew Greaves, said:
“There is an increasing demand for cryptocurrency insurance since it is becoming more and more popular. It is Lloyd’s witness that the market has developed an innovative solution to manage these additional risks and to ensure customer safety in their assets from physical and online robbery”.
“Coincover CEO David Janczewski commented:
“We are very pleased to have cooperated on this unique and timely solution to the crypto asset market with Atrium and the Lloyd’s PIF members. As the market for crypto-assets re-heats in early 2020, a fresh wave of eager crypto-customers is poised to jump in after being turned off due to a lack of proper safety from robbery and loss. We can eliminate these limitations and extend the crypto appeal with this revolutionary new strategy. It is another step forward towards allowing the use of bitcoin.”
The insurance broker who collaborated with Atrium and Coincover to develop the policies said: James Gadbury, Senior broker, Prospect:
“We are thrilled that Coincover has supplied this unique insurance cover that shows Lloyd’s entrepreneurial and innovative attitude. In the process of transition to the mainstream, Prospect and the entire insurance industry should help this rapidly growing sector.”
In response to an increase in the hacking of cryptocurrency accounts reports, a collection of underwriting companies, dubbed Atrium (Lloyd’s Coincover trade unions) have produced £100,000 insurance.
The policy includes a “dynamic limit,” as Lloyd says, which raises or reduces following crypto-asset price changes. This means that, even if this flushes within the coverage period, the insured is always compensated for the underlying worth of their managed assets.
SEE ALSO: Can you Insure Cryptocurrency in 2021?
Concerns About the Insurance Industry in the UK
According to an American Grayscale Investment poll, around three-quarters of investors cited theft as their major fear regarding digital currencies.
These suspicions appear to be justified by the numbers. CipherTrace, a blockchain information company, estimates that hackers robbed crypto assets in the first half of 2019 at $480 million.
In addition, this led to bad publicity for Binance – one of the world’s top cryptocurrency exchanges – which said it had experienced a ‘major security breach’ resulting in hackers robbing $ 40 million of the value of Bitcoin from ‘hot wallets.’
“As more money pours into the crypto-asset market, the losses from hacking are on the increase,” said Trevor Maynard, head of innovation at Lloyd’s.
However, cryptocurrency companies have found ways to safeguard their digital resources against robbery and to guarantee losses that slip the net by working closely with the Lloyd underwriters.”
Lloyd’s Cryptocurrency Insurance Policy
The policy is supported by the TMK and Markel panel of Lloyd’s other insurers. This unique Lloyd’s solution is well ahead of the growing demand for insurance that can cover cryptocurrencies by Matthew Greaves, an Atrium’s underwriter.
The policy will aim to mitigate “these new dangers and to safeguard clients from robberies, from physical to online attacks, thus to give them the security of their possessions.”
This is the latest effort to modernize the 334-year-old insurance business. In October it announced plans to turn its attention on technology innovation and automation utilizing a new electronic risk exchange capable of managing 40% of its portfolio.
According to the analytical company Chainalysis, the number of attacks keeps increasing because crypto hackers are becoming increasingly sophisticated.
In the 2020 crime crypto report, chain analysis shows that the two most prominent exchange hacks of 2019 are responsible for heat wallet attacks.
Binance lost $40 million in May 2019 to hackers. This was followed by the November 2019 Upbit hack, which saw almost $50 million in losses.
“As the crypto-assets market rises again in early 2020, a fresh wave of clients standing ready to jump in has been delayed by the lack of effective security against robbery,” said David Janczewski, CEO of Coincover.
“We can remove these obstacles and expand crypto appeal with this revolutionary new strategy. It is another step towards the adoption of cryptocurrencies, “He added.
Frequently Asked Questions (FAQ)
1. Can I insure my Cryptocurrency?
Yes, you can. With Theft cover provided by Coincover, you can have permanent protection and a guaranteed amount of funds if your cryptocurrency gets stolen.
2. How much does Crypto Insurance cost?
Crypto insurance costs as much as $1 million per annum in the United States
3. What is the safest Crypto Exchange?
There is no one safest crypto exchange in particular as various crypto exchanges come with their excellent unique features.
I would recommend Coinbase among them because it has a lot of security and provides insurance for all its assets.
4. Has Coinbase ever been hacked?
Vidovics lost nearly $170,000 in the blink of an eye when a cyber crook hacked into their Coinbase account. Some users have also reported a compromise on their accounts at one time or the other. Coinbase claims it has over 43 million customers and it’s still the “Most trusted” Cryptocurrency Exchange out there.
Final Thoughts
It is interesting to know that crypto traders are aware of crypto insurance and have taken appropriate steps to ensure that their accounts are not hacked or stolen.
Crypto exchanges such as coinbase have been able to set the ball rolling for other crypto exchanges to emulate.
Hopefully, in the nearest future, every crypto exchange can provide insurance for its traders and ensure that they have the highest and safest security possible to keep their assets safe.
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