Major insurers worldwide are offering policies to help investors protect against cryptocurrency heists.
Bitcoin theft insurance is becoming a growing business as global insurers offer cryptocurrency investors and business coverage against theft. Providers are taking on a number of different challenges as traders pour billions into buying and selling these barely regulated and highly volatile digital currencies.
At the moment, only a handful of insurers are selling the policies, but many more are coming soon.
Among the Bitcoin theft insurance companies currently selling include Chubb, XL Catlin, and Mitsui Sumitomo Insurance. That said, Reuters has reported that there are a number of other major insurers around the world that are taking a serious look at providing their own versions of cryptocurrency theft insurance coverage.
These policies are aimed primarily at the companies that handle cyrptocurrencies such as Bitcoin and Ethereum’s Ether. Those companies manage the trading among anonymous investors. That said, smaller policies for the traders themselves are also in the pipes.
Bitcoin theft insurance only recently became a business worth noticing as cyrptocurrencies have rapidly spiked.
Until now, insurance companies have flown under the radar when it came to this type of coverage. However, as cryptocurrency prices start to spike and as they become more commonplace – even making their way into the mainstream in some limited regions – the insurance industry has started taking this market more seriously.
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The risks related to cryptocurrency are not hard to spot. The volatility of these digital currencies has created billionaires and has created millions in losses. That said, even among the greater success stories, hacks, fraud and technical errors have also resulted in billions in lost dollars throughout the cryptocurrency ecosystem. Many hacked exchanges have been forced to shut down altogether.
Coincheck, a cryptocurrency exchange in Tokyo, became the latest to fall victim to hackers who stoke around $534 million in digital coins.
For Bitcoin theft insurance companies, the main challenge is to determine how to go about providing the coverage based on the little currently known and understood in the cryptocurrency industry. Insurers typically rely on models built on years of accumulated data with clear trends. This foundation is lacking in digital currencies, though providers are still seeking to make their way into this niche where coverage is required and where that need will only continue to grow.