The crypto insurance market is in its infancy and cover is difficult to find as per a GlobalData survey. There is a significant growth opportunity for insurers as cryptocurrencies become increasingly popular while more providers are bound to emerge in this space.
Only 10.8% of cryptocurrency holders around the world hold insurance for their digital assets as per GlobalData’s 2024 Emerging Trends Insurance Consumer Survey. Yet 41.9% of non-policyholders would purchase a policy if it was offered to them, while a further 26.2% would be open to doing so. This signals there is strong demand for products that protect such digital assets from financial losses. Further findings from the survey reveal that theft or hacking of digital assets is regarded as the most important risk to cover in a crypto insurance policy, with a quarter (25.1%) of consumers ranking this as the most important policy feature. Insurers should prioritize developing policies that cover the features most desirable to customers to stand out from the competition.
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Historically, insurers have been hesitant to offer coverage for cryptocurrencies owing to scepticism—they are non-traditional, non-physical assets and there is a lack of historical data for underwriting. Cryptocurrencies are also largely unregulated and highly volatile. Consequently, insurers continue to view crypto insurance as a highly risky product.
As a result, the number of insurers offering cryptocurrency insurance remains limited, but this figure is gradually increasing. In a recent move, US-based Blockchain Deposit Insurance Consultant Group launched a new international entity, Blockchain Deposit Insurance Corporation (BDIC), to provide crypto insurance. Based in Bermuda, BDIC will offer digital wallet coverage for select cryptocurrencies such as Bitcoin, Ethereum, and Solana. Reportedly, BDIC plans to seek Lloyd’s coverholder status, which would enable it to underwrite complex cryptocurrency risks.
As cryptocurrencies become increasingly popular, demand for insurance will also grow and more providers will emerge. To seize the opportunity, the insurance industry will have to address the unique risks associated with cryptocurrency through innovative solutions that mitigate these new risks and protect against losses. Policyholders will gain peace of mind knowing they will receive financial security in the event of unforeseen incidents such as loss of private keys, hacking of their accounts, or errors in transactions.
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