Cryptocurrency is the next frontier
Cryptocurrency and insurance is a no brainer!
Currently, the cryptocurrency sector mostly consists of startups and is not large enough to provide the substantial revenues needed to catch the attention of the insurance industry. Based on whats available publicly even cryptocurrency giant Coinbase has only about 2% of its coins insured by Lloyd’s of London. These coins are presumably held in hot storage. The rest is shrouded in security an secrecy so little is known about their insurance status.
Insurance for cryptocurrencies is quite important, with the current instability of the cryptocurrency ecosystem due to hacks and bugs. The exponential growth in valuation of the cryptocurrency sector has resulted in massive thefts from wallets and exchanges. in early 2018 about $500 million in various cryptocurrencies was stolen from a Japanese cryptocurrency exchange called Coincheck. These hacks have resulted in a perception of a vulnerable ecosystem that cannot be taken seriously by the mainstream finance ecosystem yet.
Cryptocurrencies are a unique challenges for insurance companies. Traditional insurance premiums are usually based on some sort of historical data. at this point in time this type of data is limited for cryptocurrencies. There is uncertainty in the volatility of this young market and that can effect premiums, because of the changes in the number of coins being insured at any given time. A huge hurdle for insurers is the regulatory uncertainty of cryptocurrency businesses and users, can complicate plans for interested parties.
Turmoil? A Source Of Revenue!
the various happenings within the cryptocurrency sector should prove to be a good source of revenue for insurance companies. According to a Bloomberg report, companies operating in the cryptocurrency sector usually purchase theft coverage to insure against cyber theft and crime. Insurance seekers can expect to pay around 5% of their coverage limits. to hedge against cases with large losses the coverage can be spread between several underwriters for amounts between $5 million to $15 million. This ensures that no single insurer is stuck with a huge deficit in case of a hack claim.
Surely over the next few uears the insurance companies will figure out ways to help protect cryptocurrency holders from losses; Especially of the price recovery of bitcoin continues. There is still much work to be done in the in the cryptocurrency sector, eventually insurance will make its way into the space adding a new layer of legitimacy to thr budding sysem.
Posted from my blog with SteemPress : https://habarinetwork.com/2018/07/31/cryptocurrency-is-the-next-frontier/
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