Cryptocurrency Insurance: More Companies Join The Bandwagon

By
Dennis Mangoli
February 19, 2018

The rise of theft, fraud, and hacking associated with bitcoin trading has pushed insurance firms to offer insurance packages to investors in the digital currency space. Several insurers have decided to venture into offering insurance covers for different companies dealing with cryptocurrency.

The risks involved are quite high, but the market is ripe for insurance firms to offer their services. For instance, last week on Friday Coincheck ,a company  in Tokyo was the recent victim of hacking with coins worth $534 million being stolen. Such incidence will be a thing of the past with insurance industry offering covers for digital trading companies.

Insurance Firms Offering Packages

Some of the companies offering insurance coverage in cryptocurrency include Great American Insurance Group, XL Catlin, Chubb, Mitsui Sumitomo Insurance among others. These companies offer different insurance packages to their clients. For instance, the latter insurance firm insurance package takes 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.

Another company that recently launched its insurance services in the cryptocurrency trading is Line . Line is a messaging app based in Japan that has announced its venture into digital currency with plans already underway. Although Line is a messaging app, it has created a new division which 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.

Apart from the above, another firm offering insurance covers to merchants and retailers who accept bitcoin as payment is bitFlyer, which offers packages for any payment transaction associated with bitcoin in Japan. The merchants will be covered from transaction delays, mishaps with payment system or gateway issues. The cover will be offered to people who have the point of sale systems offered by bitFyler exchange through Mitsui Sumitomo Insurance firm.

Challenges to Insurance Firms

Insurance companies are doing their best to cover all the cryptocurrency trading companies, but the firms have first to invest in good security features to reduce cases of fraud. With trading taking place online, scammers are also on the rise.  Many have set up shady companies which pretend to be dealing in cryptocurrencies, yet they are after stealing from investors.

Similarly,  insurance firms should come up with good mechanisms for doing due diligence to companies before offering their insurance covers to prevent covering shady companies which are after stealing from investors.

Bottom Line

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.

More insurance companies are also planning to offer their services to the cryptocurrency trading companies which will enable competitive offers to be readily available for the traders and investors.

Featured image from Shutterstock.

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