Insurance providers rethink their approach to crypto

After years on the sidelines, the insurance industry is increasingly embracing the digital assets sector. Many crypto exchanges and custodians have for years been unable to get insurance or shied away from getting it because of high premiums stemming from a dearth of insurers willing to underwrite the industry’s risk. Some big exchanges have chosen to insure themselves instead. But that is slowly changing, as the traditionally risk-averse insurance industry—from big brokers to new startups—dips its toes into the water by setting up new teams focusing on cryptocurrency, hoping to profit from the industry’s rapid growth.

“Previously, there wasn’t the demand that we’re seeing now, and over the last six months of last year, there’s been a real growth in demand from our clients to better understand this space and to be able to manage the risk in the space,” said Luke Speight, who last month became the director of a newly created digital assets team at insurance broker and consulting firm WTW, formerly known as Willis Towers Watson. U.K. startup and Lloyd’s of London licensed broker Superscript earlier this month launched a crypto insurance product called Daylight that will cover technology liability and cyber insurance, the company said. It plans to expand coverage this year to include directors and officers, custodianship and crypto mining. The shift comes as the crypto market saw another wave of turmoil in recent weeks, a reminder of the highly volatile nature of an industry that still lacks significant oversight and investor protections. As traders take flight from risky investments amid rising interest rates and high inflation, more than $1 trillion in digital money has vanished since November.