bitcoin cryptocurrency

Crypto Insurance for Your Bitcoin

Dr. Julian Hosp, the co-founder and president of TenX, a company that makes cryptocurrencies, is understandably bullish on bitcoin and cryptocurrencies in general.

bitcoin cryptocurrency

CCIG President and COO T. Scott Kennedy.

Hosp, in a recent commentary published by CNBC.com, digs into the reasons he believes 2018 might be the best year ever for cryptocurrencies. Among them?

Scalability challenges, he says, are about to be solved thanks to new networks that allow for transactions off the primary computing platform that make trading using Bitcoin possible.

Hosp also believes the addition of new regulations will help, giving users and institutional clients the confidence to invest in what has historically been a volatile business.

You can read the entire Hosp piece by clicking here.

What’s really interesting is that amid the surge in Bitcoin – you have heard about the surge, right? – insurance carriers appear to be taking notice, too.

XL Catlin, Chubb and Mitsui Sumitomo Insurance, among a few others, are all now starting to offer protection against cryptocurrency theft.

Typically, crime insurance applies to cash, securities or valuable physical objects. If an employee embezzled cash or a burglar stole computers, a crime policy would cover the loss. But certain carriers are now willing to offer limited coverage when an employee or a hacker steals Bitcoin from your system.

This is rather remarkable given the history of hacks, errors and fraud that have already cost digital currency investors billions.

The latest high-profile case is at the moment under investigation by Japanese authorities – the theft of $534 million of crypto-coins from Tokyo-based Coincheck.

Crime aside, digital currencies also are highly unpredictable, with the potential to skyrocket for no apparent reason or plummet dramatically because of a simple software bug. Imagine if the dollar lost 60% of its value in 24 hours? We’ve seen wild fluctuations like that in cyber currencies.

Despite all this, the public’s interest has remained unflagging, and now a select few insurance carriers are dipping their toes into cryptocurrency coverage.

They are not, we should make clear, going into this whole-hog. The big question for them all is whether premiums will be large enough to cover possible losses.

That’s why one insurer, for example, only protects Bitcoin-accepting businesses from employee theft, but won’t insure against hackers.

Others won’t insure online wallets — commonly known as “hot wallets” — due to the higher risk of hackers and will only cover offline “cold storage,” meaning away from Internet access.

In any case, even if tentatively, insurers are now making cybercurrency coverage available and that’s something that will no doubt make Hosp and anyone else mining for gold in the digital asset world happy.

    Scott Kennedy, president and COO of CCIG, has more than 30 years of insurance and risk management experience.

CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of risk with our risk and claims management expertise and a commitment to service excellence.

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