Cybersecurity risks are the greatest enemy of the cryptocurrency trading industry with exchanges being the most vulnerable. Cryptocurrency trading is here to stay and while exchanges continue to invest in top-notch security products and solutions to deter hackers, there always will be some risk that can’t be mitigated and that’s where insurance companies come into play.
Reports have emerged that several insurers have decided to venture into offering insurance covers for different companies dealing with cryptocurrency. Recent high-profile hacks of some of the largest cryptocurrency exchanges across the world have lured some frontline insurance players to the cryptocurrency arena.
Great American Insurance Group, XL Catlin, Chubb, Mitsui Sumitomo Insurance have already started offering insurance coverage in cryptocurrency through different insurance packages to their clients. Insurance companies are offering packages that take care of not only internal but also external threats. The cover also includes mistakes; unauthorized access, and employee theft. The packages range from ten million yen up to one billion yen equivalent to $88,500 and $8,850,000 respectively.
In addition to the package, the cover comes with other services which help in preventing such case. The firm provides security diagnosis and checks employer background before employment in the company. The preventive measures are in place to mitigate loses which may occur.
Line, which is a messaging app based in Japan, has jumped the cryptocurrency insurance bandwagon. Through a new division it will offer a platform for its users to sell and buy bitcoin. The platform will also offer loans and insurance covers to its users. The firm has millions of users who are the target market for the insurance and loans.
While insurance companies may have seen a lucrative new sector opening up, there is a lot that needs to be done to ensure that the companies and exchanges they insure are actually doing their part to ensure security. Insurance firms will be required to come up with good mechanisms for due diligence of their clients before they start offering insurance covers to prevent covering shady companies which are after stealing from investors.
The insurance industry decision to venture into cryptocurrencies market is a good venture which will enable them to reap the profits. But the venture also exposes the insurance firms to uncertain challenges associated with fraud and money laundering which are serious offenses. Insurance companies have to do due diligence before offering their covers to the companies. It will enable the companies to offer covers for legit firms and avoid any company associated with money laundering.