Huge lack of capacity in the insurance sector for cryptoassets
Evertas, the world’s first cryptoasset insurance company, believes there is less than 0.5% of capacity in the world’s insurance market to cover the value of cryptoassets globally.
The company estimates the global insurance industry only has capacity of around $1 billion to insure crypto assets, and it says this lack of supply is driven by three factors:
- The relatively small size of the crypto asset market today compared to other sectors
- A lack of underwriting expertise
- ‘Blanket’ mandates to not write insurance policies in the crypto space
J Gdanski, CEO and Founder of Evertas said “The current cryptoasset market is currently worth around $300 billion and the premium market here is incredibly small when compared to other more mature products. Simply said, this market is too small for large, established carriers to develop and deploy sizeable full-time teams. However, some insurers are ‘dabbling’ in the market to monitor the sector and the premium rates available.
“In addition to this, insurers are increasingly aware of a lack of underwriting capabilities in the cryptoasset space and many are unable to adequately translate the risk for their internal underwriting teams. Underwriting cryptoassets requires an extensive understanding of unique crypto-specific areas such as private key storage/custody, key generation/management, and blockchain networks, which must be examined with an eye to the unique and specific threat vectors that exist with cryptoassets.
“Finally, some carriers have taken blanket positions refusing to consider any risk related to crypto assets and the position is partially driven by early negative stigma associated with cryptocurrencies.”
However, Evertas believes that as governments actively evaluate crypto asset-oriented financial products and institutions increasingly develop these, views from insurers have shifted considerably over the past 12 months or so.
Raymond Zenkich, President and COO said: “Projects like Facebook’s Libra digital currency and China’s CBDC continue to highlight the drive towards digitization – insurance capacity will need to follow to meet the growing relevance of crypto assets.”
Evertas focuses exclusively on crypto assets, helping clients and insurers understand the risks associated with these and ensuring they are adequately covered.
Notes to editors:
For further information please call Phil Anderson at Perception A on 0044 7767 491 519.
Evertas is the world’s first cryptoasset insurance company. In February 2020, the company rebranded from BlockRe, which was founded in 2017.
Evertas has a world-leading team led by an experienced group of executives including the founding Chief Insurance Officer (and founding member) of Lemonade, blockchain team leader at Bank of New York, and a blockchain industry insurance expert. Their backgrounds bring together an unrivalled cryptoasset/technology expertise with pragmatic and practical insurance industry expertise.
The founders of Evertas have over 40 years of combined experience in the insurance sector, and more than ten in the crypto and blockchain markets.