Crypto insurer Evertas authorized to offer largest single crypto insurance policy

Arch Capital

02/06/2023 15:17

By Gertrude Chavez-Dreyfuss
       NEW YORK, June 2 (Reuters) - London-based Arch Insurance
International has authorized cryptocurrency insurer Evertas to
increase the coverage limit for a single policy to $420 million
for custodians or exchanges in what the U.S firm said is the
highest in the industry.
    The move is a big boost for a crypto sector tainted by the
collapse of major market players such as FTX and should help
ease concerns on hacks and thefts that have plagued the
industry. Currently only 2-3% of global cryptoassets are
believed to be insured, Evertas said.
    "This is the single largest policy that can be approved from
one insurance company," Evertas chief executive officer J.
Gdanski told Reuters.        
    "A lot of other things that you may have found in press
releases say like, oh you know, $500 million, a billion or
whatever. Those are programs that actually require multiple
underwriters to sign off."
    The $420 million coverage applies to crime-related policies
involving the theft of private keys - or codes used to authorize
transactions or prove ownership - held by a custodian. Examples
of custodians are Coinbase Exchange  COIN.O  and Binance.
    The previous single policy limit for Evertas was $5 million.
    Evertas is a Lloyd's of London  SOLYD.UL  "coverholder", an
insurance firm with specialized technical or local knowledge
that international insurers rely on to assess or underwrite
complex risks, such as crypto. It only writes insurance for
custodians with private keys. 
    Evertas joined the Lloyd's of London marketplace in February
last year. 
    Being a coverholder gave Evertas the authority to write
crypto insurance on behalf of Arch, one of Lloyd's syndicate
members, part of a group of insurance entities that band
together to provide coverage for large risks.
    Arch, which is a unit of Arch Capital Group  ACGL.O ,
declined to comment for this story. 
    The London insurer has also authorized Evertas to provide
insurance on crypto mining hardware of up to $200 million, also
the largest single policy coverage, Gdanski said. Those are
property policies used by crypto miners to protect their mining
equipment from being destroyed by damage from fire, flood, and
other natural causes. 
    "Having a $200 million program is actually quite important
because mining operations in particular they tend to have very
large facilities with a lot of equipment and this larger policy
size allows for greater protection," Gdanski added.
    The latest data showed that crypto losses from thefts and
hacks reached $400 million in the first quarter of the year,
according to a report from blockchain analysis firm TRM Labs.
That followed about $3.7 billion in crypto losses in 2022.
    "What you're seeing is that very conservative entities, the
insurance industry, is saying we think there's enough here -
there's enough of a business and enough demand - to support
insuring this new space," Gdanski said.

 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Alden
Bentley and Mark Potter)
 ((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters
Messaging: rm://gertrude.chavez.reuters.com@reuters.net))