Crypto insurance providers spend a lot of time insuring cryptocurrency companies, and almost none of them provide coverage to individuals, insurance and cryptocurrency executives told Cointelegraph.
Last year, $3.9 billion was stolen from crypto companies, decentralized financial platforms, and users, a 22 percent year-over-year increase that includes hacking and exploitation alone. Some believe 2023 could be even worse.
Raymond Zenkich, president of cryptocurrency insurance company Evertas, told Cointelegraph that the initial risk assessment of a cryptocurrency platform is a complex process.
As he explained, initially induction - the process of evaluating and analyzing insurance business risks - is carried out "on a specific request", and includes the analysis of 2,000 variables in 20 risk areas.
"An important risk factor is key management — whether keys are stored in warm, hot or cold wallets," Zenkic said.
It doesn't stop there, because "there are different levels of temperature, each with its own risk profile."
Cryptocurrency currency Bitru suffered a hot wallet attack on April 14 when attackers stole nearly $23 million worth of crypto assets. According to the company, the affected wallet accounted for less than 5% of the total transactions, while the rest of the wallets were "not affected".
Zenkich explained that once the level of storage risk is determined, the company must analyze thousands of "business technology and operational variables" before charging what premium:
"After answering all the relevant questions, we decide what premium to pay to justify the risk."
However, crypto insurance providers are reluctant to insure people who do not have assets on the exchange, such as self-service or otherwise.
Adrian Pshelozny, CEO of Australian cryptocurrency exchange Independent Reserve, says this is because it becomes more difficult for the customer to prove that the insurance company is not only the actual lost and found, but also the insurance company.
