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Hacks, losses in cryptocurrency offer vast opportunity for insurers

Cryptocurrency-related insurance is a vast untapped market, with less than 1% of crypto investments covered amid hacks and losses in the industry running into the billions of dollars, Cointelegraph reported, citing an executive from decentralized insurance protocol InsurAce.

See related article: DeFi insurance: Why buy coverage for your digital assets?

Fast facts

  • Dan Thomson, the chief marketing officer of InsurAce, said crypto insurance coverage was a “sleeping giant” and that on-chain insurance can protect investors in digital assets from events, such as when a decentralized finance protocol is compromised.

  • “DeFi insurance is a sleeping giant. With less than 1% of all crypto covered and less than 3% of DeFi, there’s a huge market opportunity still to be realized,” Thomson said in the report.

  • InsurAce said it had paid out US$11.7 million to 155 clients who were covered during the TerraUSD (UST) collapse that sent shockwaves through the industry in May.

  • Some crypto exchanges have started to offer insurance funds for users. Singapore-based exchange Bitget said last month it has launched a US$200 million fund to act as an “emergency insurance reserve” to protect users when their losses are not a consequence of their own actions or behavior on the platform.

  • In 2021, about US$3.2 billion in cryptocurrency was stolen, almost six times the amount in 2020, according to a report in February by blockchain analytics firm Chainalysis.

See related article: Klaytn chief says reducing ‘human elements’ can prevent hacks