Insurance giant Lloyd's of London launched a new insurance policy to protect cryptocurrency held in online wallets against theft from hacks.
Limits, from as low as £1,000, are flexible to take into account the price changes of crypto assets. A Lloyd's syndicate — a group of underwriters — called Atrium devised the policy in response to a surge in reports of the hacking of cryptocurrency accounts in in conjunction with Coincover.
"There is a growing demand for insurance that can protect cryptocurrency as it becomes increasingly popular," Atrium underwriter Matthew Greaves, said.
As more money flows into the crypto-asset market, losses from hacks are on the rise"
"It is a testament to Lloyd's that the market has put together an innovative solution to mitigate these new risks and protect against theft - from physical as well as online vaults - thereby providing customers with peace of mind that their assets are safe."
The policy is worth £100,000 and will ensure insurance for investors should their crypto wallets suffer a hack.
According to analytic firm Chainalysis, crypto hackers are getting more sophisticated, as the number of attacks is on the rise. In 2020 crypto crime report, Chainalysis details that hot wallet attacks were a factor in the two most prominent exchange hacks of 2019. In May, Binance lost $40m to hackers, followed by the Upbit hack in November which observed nearly $50m in losses.
"As the crypto asset market heats up again at the start of 2020, a new wave of crypto-curious customers are standing by at the ready to jump in, having previously been put off by the lack of adequate protection against theft and loss," Coincover chief executive David Janczewski said.
"With this innovative new policy, we can remove these barriers and broaden the appeal of crypto. It represents another step forward in enabling cryptocurrency adoption," he added.
Trevor Maynard, head of innovation at Lloyd's, said in the announcement the UK-based insurance giant is the "natural home for insurance innovation because of the unique ability of syndicates to collaborate to insure new things."
"As more money flows into the crypto-asset market, losses from hacks are on the rise. Nevertheless, cryptocurrency companies have found ways to protect their digital assets from theft," Maynard said.
The new policy will be supported by a panel that includes other Lloyd's insurers, including Markel and TMC.