The cryptocurrency market is starting to mature and is attracting the interest of many industries. One that can lead to a mutual benefit is the availability of insurance. Big providers around the world are already looking into what products and level of coverage should be offered for cryptocurrency-related businesses. And as the economy starts to recognize the relevance of this alternative form of money, all the more reason why insurance is a critical need.
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Reasons why the cryptocurrency ecosystem needs insurance
According to Next Insurance, every business needs protection. There are different liabilities that may arise and damage the company. When it comes to cryptocurrency, very little is known about the availability of insurance providers. But, insurance in this industry is relevant for many reasons.
First, the industry itself is still unstable. For example, the exponential rise in the value of bitcoin resulted in theft and other anomalous activities. These hacks make the ecosystem vulnerable to attacks. One instance of cyber-attack is enough to cripple a company. Indeed, there’s an obvious need to have insurance in place to protect the company.
The unique challenges of offering insurance for cryptocurrency providers
Although the opportunity is there, there are some insurance companies that hesitate. Entering this industry is challenging because of the unique risks. Most insurance companies need historical information to come up with premiums and products that suit the needs of the insured. Unfortunately, this data isn’t currently available for cryptocurrency businesses. Also, volatility is another issue. Most importantly, the industry also and lacks structured regulation.
But despite these challenges, there are insurance companies that already offer products designed for cryptocurrency companies. Also, because it’s an industry that’s bound to grow steadily in the coming years, there will be more interest coming from the insurance sector. In fact, many establishments are already assessing risk factors and ways to mitigate them. This way, they can better understand how to better insure these unique prospects.
What types of business insurance do cryptocurrency companies need?
In general, business insurance for cryptocurrency providers should cover all known risks. Again, risks vary depending on the industry. In the meantime, it’s possible for insurers to offer general liability insurance to a cryptocurrency provider. But, the coverage details should specify the included and excluded risks.
Insurance against cyber-attacks is another product that makes sense if you think about the risk exposure of these companies. Their vulnerability to hacking and other forms of online terrorism should be one of the primary reasons to get insured. Lastly, if the company has a place of business and hires employees, worker’s compensation insurance is another essential coverage.
Indeed, the cryptocurrency industry can be a source of massive revenue. For insurance providers, it’s worth taking notice and taking advantage of this chance. Right now, most products these companies get are bespoke to meet their specific needs. Cybercrime and theft insurance are two of the most commonly availed by cryptocurrency providers. But, when more data becomes available, more insurance companies will open their doors to insure these companies.
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