Cryptocurrency-related insurance is a vast untapped market, with less than 1% of crypto investments covered amid hacks and losses in the industry running into the billions of dollars, Cointelegraph reported, citing an executive from decentralized insurance protocol InsurAce.
See related article: DeFi insurance: Why buy coverage for your digital assets?
Fast facts
Dan Thomson, the chief marketing officer of InsurAce, said crypto insurance coverage was a “sleeping giant” and that on-chain insurance can protect investors in digital assets from events, such as when a decentralized finance protocol is compromised.
“DeFi insurance is a sleeping giant. With less than 1% of all crypto covered and less than 3% of DeFi, there’s a huge market opportunity still to be realized,” Thomson said in the report.
InsurAce said it had paid out US$11.7 million to 155 clients who were covered during the TerraUSD (UST) collapse that sent shockwaves through the industry in May.
Some crypto exchanges have started to offer insurance funds for users. Singapore-based exchange Bitget said last month it has launched a US$200 million fund to act as an “emergency insurance reserve” to protect users when their losses are not a consequence of their own actions or behavior on the platform.
In 2021, about US$3.2 billion in cryptocurrency was stolen, almost six times the amount in 2020, according to a report in February by blockchain analytics firm Chainalysis.
See related article: Klaytn chief says reducing ‘human elements’ can prevent hacks