T Skevington and M Bacina
Lloyds of London launches crypto wallet liability insurance
UK-based insurance giant Lloyds of London has announced the launch of a new insurance policy designed to protect digital currency held in hot wallets. The new policy is a liability insurance policy, and will have dynamic limits that increase or decrease in line with the price movements in digital currencies.
The new policy was created by Lloyd’s syndicate Atrium in conjunction with Coincover, and is backed by a panel of other Lloyd’s insurers, which includes TMK and Markel, all of whom are members of Lloyd’s Product Innovation Facility.
The dynamic limit of the policy, which starts from as little as £1,000, means that the policy holder will always be indemnified for the underlying value of their digital currency even if this fluctuates over the policy period.
In comments to CoinDesk. Coincover described the process that policy holders would go through to make claims under the policy. In particular, policy holders will need to:
supply [Coincover] with certain details such as what they felt happened (i.e. PC hacked, lost phone etc.) as well as fill out a police report.
Coincover then investigates the claim and "endeavor to pay out within 48 hours" if the claim is approved. Reportedly, the policy will not generally cover digital currencies "willingly" sent to the wrong address.
Describing why Lloyds has introduced this product, Matthew Greaves, Underwriter at Atrium, said:
There is a growing demand for insurance that can protect cryptocurrency as it becomes increasingly popular. 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 piece of mind that their assets are safe.
Trevor Maynard, Head of Innovation at Lloyd’s, said:
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 and, by working closely with Lloyd’s underwriters, to insure losses that do slip through the net.
One consistent limiting factor for blockchain and digital currency businesses has been their inability to access conventional financial services, such as banking, custody and insurance. This new policy from Lloyds is a step in the right direction and will assist exchanges and other businesses which have had concerns over the security of digital assets including digital currency.