Evertas, the world’s first crypto asset insurance company, says that there is a serious problem amongst insurers when it comes to understanding crypto assets, going as far as to call it ‘phantom’ knowledge.
The company has engaged with several insurers and brokers on the issue of insuring crypto-assets and has found many wrongly claim to have a good understanding of the risks associated with these assets, and mistakenly believe that the sector’s underwriting and pricing in this area are strong.
Evertas argues that with a global capacity of just $1 billion to $2 billion from insurers for a market that is worth over $250 billion, and with no dedicated underwriting or claims teams, insurers could be hugely overestimating their level of understanding of crypto-assets and the quality of service they provide to this market.
New research from Evertas amongst senior insurance executives reveals that 68% believe the quality of underwriting of crypto assets within the industry is good, with just 32% describing it as average or poor.
Similarly, 76% believe the pricing of insurance cover for crypto0assets is strong, and 42% say the claims process is good or excellent.
J Gdanski, CEO and Founder of Evertas, said: “Crypto-assets and blockchain systems involve multiple disparate technologies and a range of risks including cyber, regulatory and fraud that are unlike any other market. Although our findings reveal that senior insurance executives believe the sector has a good understanding of the risks around crypto-assets and that underwriting, pricing and claims are effective, the reality is they are not. Proof of this can be found in the market’s woeful lack of capacity for the crypto asset and blockchain markets.
“However, there is little doubt that the market capitalisation of crypto-assets is growing rapidly and that it represents an exciting opportunity for insurers and brokers. Their challenge is to build the knowledge and expertise needed in-house – although this can be expensive and take a long time – or partner with specialists in this area like us.”
Evertas believes it’s the only company in the world focused solely on providing insurance coverage for crypto assets and users of blockchain systems. It has a unique offering providing a full suite of services for these assets – from risk audits, to underwriting, investigations and claims handling.
It comes after the Insuretech Board issued an industry warning asking insurers not to lose sign of innovation requirements after the impact of COVID-19.
The board, which supports the UK’s position as a global leader in insurance, asked:
To all leaders in the UK insurance sector, we request that you commit to supporting:
- the active exploration of strategic partnerships with insurtechs – a mutual collaboration between insurtechs firms and insurers, to develop initial concepts into products that will ultimately better serve customers – investment into new and existing initiatives, via both traditional and corporate Venture Capital
- communication between firms, to ensure that it is clear and timely, and as transparent as possible with respect to the decision-making processes around engagement, funding, and ongoing support
It added: “Innovation in the UK insurance sector depends heavily on the leadership of our major insurers. They are the engine rooms that many of our best and brightest Insurtechs build their businesses upon, and they often underwrite the risks that allow our insurtechs to innovate on behalf of customers.
“Innovation and insurtech pave the way for the future of the insurance sector, and at this critical juncture, the sector must now band together and collaborate as best it can.”