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July 27, 2023

Digital Assets: The Insurance Industry is Catching Up

ITC Team

The adoption of digital assets is revolutionizing day-to-day consumer lifestyles. While the commercial insurance industry may have experienced some challenges and initial hesitations towards blockchain technology, it is gradually embracing blockchain’s capabilities, opening the door to innovative solutions that can enhance services and provide customers with more efficient and secure insurance options.

The future looks promising as these advancements pave the way for a more seamless, transparent, and customer-centric insurance experience, benefiting both consumers and insurers alike.

What are digital assets in the context of insurance?

In the context of insurance, digital assets refer to intangible and virtual properties that hold value and exist solely in digital form. Examples include cryptocurrencies like Bitcoin, digital tokens, non-fungible tokens (NFTs), digital securities, and digital data/intellectual property.

Insuring digital assets involves providing coverage against risks such as theft, hacking, loss of access, and other cyber threats. Insurance policies tailored for digital assets aim to safeguard their value and security, offering individuals and businesses financial protection in the digital landscape. With the increasing adoption of digital assets, the demand for specialized insurance solutions to protect these intangible assets is also on the rise.

About five years ago, the London market for commercial lines of insurance – the most traditionally-minded corner of the global insurance industry – was abuzz with talk of Blockchain technology as a positive, or at least inevitable, force for industry disruption.

One major announcement, receiving London specialty market backing, was the world’s first blockchain platform for marine insurance. That was back in 2018.

Fast forward several years – what’s the status of insuring digital assets in all ITC geographies?

Asia Pacific

In the rapidly growing APAC region, the insurance of digital assets is experiencing substantial advancements, largely due to the influence of innovative insurtech companies.

Among these, Coincover, a UK-based insurtech, has expanded its operations to APAC and gained recognition for its specialized insurance solutions catering to cryptocurrency holders. Coincover’s offerings encompass comprehensive coverage against digital asset theft, hacking, and loss of private keys, providing investors and businesses in APAC with much-needed protection in the cryptocurrency space.

Another player is Sleek, a Hong Kong-based insurtech that leverages advanced technologies such as blockchain and smart contracts and focuses on providing comprehensive digital asset insurance solutions fostering a more secure and customer-centric approach.

Several insurers in the Asia-Pacific (APAC) region were actively exploring and working on digital asset insurance solutions. Notable players included Tokio Marine Holdings and Sompo Holdings from Japan, QBE Insurance Group from Australia, and ZhongAn Online P&C Insurance from China. These insurers have shown interest in blockchain technology and have been studying ways to offer coverage for cryptocurrencies and other digital assets.

North America

Established insurers such as Chubb have recognized the growing demand for digital asset coverage and have developed specialized policies to cater to cryptocurrency holders. These traditional players leverage their extensive experience and resources to offer comprehensive protection against digital asset theft, hacking, and other cyber risks, providing customers with peace of mind in the dynamic digital landscape.

Additionally, insurtech companies like BlockRe are making significant strides in North America. BlockRe utilizes artificial intelligence and machine learning to assess and underwrite digital asset insurance risks. They collaborate with traditional insurers to offer innovative solutions for the digital asset space, further enhancing the options available to customers.

Moreover, emerging decentralized insurance platforms like Nexus Mutual are gaining attention. Nexus Mutual operates on blockchain technology, allowing users to pool funds and collectively insure against smart contract failures and other risks related to digital assets and DeFi (decentralized finance) protocols. Such decentralized insurance models present a unique approach to insuring digital assets in North America’s evolving market.


In Europe, the adoption of digital asset insurance is witnessing a notable surge, buoyed by the growing acceptance of cryptocurrencies and the expanding use cases for digital assets.

Traditional insurers, such as Allianz, are recognizing the potential of this market and collaborating with insurtech startups like Coincover and Blocksure to develop specialized solutions. Leveraging cutting-edge technologies like blockchain, these startups offer tailored coverage options, enhancing transparency and efficiency.

European authorities are closely monitoring the digital asset insurance sector to ensure consumer protection and market stability, with the development of clear regulatory frameworks being a key focus. The integration of blockchain technology has significantly improved the digital asset insurance landscape, exemplified by platforms like Etherisc and Nexus Mutual, which offer decentralized insurance options for collective coverage against risks related to digital assets and DeFi protocols.

Furthermore, the expansion of insurance coverage to DeFi protocols and smart contract vulnerabilities represents a vital trend in the European market. As the DeFi space continues to flourish, insuring against potential risks becomes increasingly crucial for participants. The collaborative efforts of traditional insurers, insurtech companies, and decentralized platforms foster a customer-centric approach, supporting the security and growth of digital asset investments in Europe’s ever-changing landscape.

Latin America

According to Chainalysiscrypto usage in Latin America experienced a staggering 1370% surge between 2019 and 2021 after the successful integration of cryptocurrencies into various Latin American fintech apps like Mercado Libre, Nubank, and PicPay.

There is a strong desire among Latin Americans to gain greater access to the US dollar as a means to hedge against inflation. Additionally, cryptocurrencies offer an easier and more cost-effective solution for cross-border remittances, attracting users seeking more efficient international money transfers. Another significant factor contributing to the rise of crypto adoption is the general shift away from traditional banking services in favor of newer fintech alternatives.

Furthermore, the availability of fintech apps and the widespread use of internet technology through cell phones, digital wallets, and gaming consoles have significantly reduced financial barriers for those who are underbanked or unbanked. This increased connectivity to the financial system has accelerated the adoption of stablecoins and cryptocurrencies for various purposes, including payments, international remittances, investments, and storing value.

What does the future hold for digital assets?

Digital assets are pushing corporate insurers to think outside the box, prompting them to reconsider the risks posed by crypto assets. The commercial cyber insurance market is one interested class of business, for example – a commercial insurance market that has grown exponentially in the past few years. Companies that deal in NFTs as part of their business may be able to insure those assets under existing cyber insurance policies, according to Forbes.

Meanwhile, a mix of US SEC regulations and recent lawsuits are getting liability insurers’ attention, as this article suggests. Insurers have been hesitant to engage in insuring risks relating to the crypto markets, but watching the risks – and opportunities  –  carefully, following the recent collapse of FTX, a crypto exchange, pricing volatility, and the limited regulation environment for overseeing cryptocurrency.

“The adoption of digital asset and blockchain technology is revolutionizing the world in which we live,” according to London market commercial and specialty broker Lockton. “From banking, payments, and capital-raising to real estate, healthcare, and education, these products, services, and technologies are producing countless new opportunities. However, they also bring with them unknown risks.

“Similar to ‘traditional’ businesses, digital asset companies’ risks can be managed via commercial insurance,” Lockton added. “To enable the growth and innovation necessary to ensure their longevity, companies engaged in the digital asset ecosystem should consider maintaining various types of professional and management liability insurance coverage.”

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