As cryptocurrency continues to gain popularity and market maturity, players from other industries are beginning to notice. The insurance industry is among the players beginning to turn their heads towards the crypto market. According to many sources, cryptocurrency insurance is going to become a huge opportunity in the coming months/years.

A spokesman from Allianz, one of the most popular and well-known insurers, told Bloomberg that the company is currently exploring product and coverage options. This is due to the fact that cryptocurrencies are currently becoming a more important, relevant, and prevalent product in the real economy.

Let’s take a look and see why cryptocurrency insurance could soon become a big industry.

Why Insurance is Important

When you begin to consider the instability of the cryptocurrency ecosystem, insurance for cryptocurrencies becomes far more important and recognized. The skyrocketing valuation of cryptocurrencies has seen multiple large thefts of Bitcoin exchanges and online wallets.

On top of that, regulatory uncertainty, as well as a lack of oversight at cryptocurrency exchanges, tend to further complicate matters for insurers who are interested in providing their services to the industry. There are certainly some very unique challenges presented by Bitcoin and other cryptocurrencies.

This is important because insurance premiums are most commonly based on historical data. However, this data is basically absent for cryptocurrencies. That is why insurance is so important for cryptocurrencies and it will likely skyrocket once it has been introduced.

Insurance has been popular throughout many other industries for years now. It is surprising that it has only now been set to become a huge industry in the cryptocurrency world.

Source of Revenue

Problems with the cryptocurrency ecosystem could also be a huge source of revenue for the insurance industry.  Most of the insurance products we see today that are aimed at the industry are bespoke products that have been tailored to fit client needs.

Usually, many start-ups and companies within the cryptocurrency industries prefer to go with theft coverage which applies to cyber insurance and crimes as well. However, hacks are excluded. Start-ups can end up only paying around 5% of their coverage limits. Annual premiums could be as much as $10 million for theft coverage.

The coverage is split between dozens of underwriters for amounts ranging between $5 million to $15 million to ensure that no insurers are left on the hook in cases of hacks when it comes to large amounts.

The Bottom Line

If you’re looking for new ways to invest, you’ve come to the right place. With cryptocurrency, you can diversify your entire portfolio with alternative investments. Whether you’re simply looking to increase capital gains or offset market volatility, your strategy matters. Instead of continuously waiting, begin investing today.

With the insurance industry becoming a big market in the cryptocurrency world, it is only up from here. As cryptocurrency will gain popularity, the market is only set to expand as market maturity does. In the next few years/months, the cryptocurrency insurance industry will open up a world of opportunities.

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