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Recently, the world of crypto has been hit by a storm when leading insurance giants announced their entry into crypto insurance business. The English insurance magnates, Lloyd’s of London and Aon, plan to venture into the crypto insurance business.
With a market worth exceeding $45 billion, Lloyd’s of London is keen on adopting new business strategies and the recent example of that commitment is its ambitious plan to adopt a completely new area, the crypto industry. Earlier this year, BitGo has pledged insurance funds to cover digital assets by providing $100 million of cover against theft and other types of mishandling. The insurance came through Lloyd’s of London. Subsequently, Coinbase revealed its plans for insurance coverage with coverings amounting to $255 million via Lloyd’s. Crypto analysts were quick to infer the increasing participation of Lloyd’s in the crypto business.
On the other hand, Aon will reportedly provide crime insurance coverage for institutions using Metaco’s SILO cryptocurrency asset infrastructure solution for hot and cold storage.
The coming in of the insurance giants is nothing to be surprised about. The organic growth of cryptocurrencies around the world has caught attention of many bigwigs who do not want to miss an opportunity to get a piece of the pie, not least in the insurance world because where there is asset, insurance will naturally follow. With a twenty-five times increase in the value of digital assets that include digital coins, tokens and other digital entities has resulted in a total market capitalization of about USD $300 billion.
Huge Potential for Crypto Insurance
The potential for crypto insurance unveils itself when one observes that insurance coverage figures at $1 billion while crypto assets exceed the $300 billion figure. There seems to be a huge gap between supply and demand and that is why we are witnessing leading insurance companies finally stepping in to bridge the deficit.
The idea of crypto insurance has a strong correlation with the security threats that crypto exchanges and customers often face when crypto coins or tokens or other digital assets are stolen during hacking attacks. Recently, Binance, which had positioned itself excellently by providing unparalleled security to customers recently became target of a $40 million theft that left it embarrassed and apologetic before its customers. The crypto world is scarred by similar hacking incidents that has put the credibility of the business into question.
The market for crypto insurance is relatively young and is still its development phase. As of today, premium revenues from crypto-based insurances stand between $200 million to $500 million. U.S. regulators are repeatedly urged to come up with clearer demands for regulations such as which digital assets are going to be considered securities and will be considered by the same laws that apply to the public companies. Hopefully, when measures are set right, a boom in crypto insurance will unravel itself.