Crypto Risks Prompt Uptick in Insurance Exclusions

As the crypto market crashes, some insurance companies are stepping up efforts to exclude coverage for crypto-related risks under a range of insurance policies.

But because crypto is still new, insurers are having a hard time defining and pricing the risk. The lack of a clear regulatory framework also makes it challenging to unambiguously exclude crypto risks from businesses’ insurance policies, potentially leading to losses for insurers, according to insurance lawyers, brokers, and directors.

At the other end of the spectrum, insurers are swimming in regulations.

“In terms of crypto and cryptocurrencies, the insurance industry is very conservative and heavily regulated,” said Mirjam Bamberger, an executive from AXA Europe.

Nicholas Pappas, an attorney at Reed Smith who represents policyholders, said he has seen crypto-related exclusions in businesses’ cyber, crime, property, and general liability policies this year.

“Insurers are putting in a lot of cryptocurrency or digital asset exclusions, and they’re pretty broad,” Pappas said.

Avoiding Losses

Carriers want to avoid the huge losses and messy underwriting they had with cyber insurance when they jumped in too quickly to sell policies without a sufficient understanding of new risks. Cyber insurers have experienced a 300% increase in losses since 2018, according to Fitch Ratings.

Consequently, cyber insurers have little appetite to cover crypto. All cyber policy renewals this year “will have a blanket crypto…

Read more…

Leave a Reply

Your email address will not be published. Required fields are marked *