One of the oldest insurance marketplaces in the world, Lloyd’s of London has moved into the cryptocurrency sphere by offering clients cover against the theft of crypto coins.
The Kingdom Trust, a qualified custodian of cryptocurrencies and tokens announced the availability of insurance against theft and lost due to natural disasters, that would be underwritten by Lloyd’s market. A qualified custodian is defined as an entity that keeps and guards the private keys of a large number of cryptocurrencies to a standard that is deemed acceptable by regulated financial institutions.
The CEO of Kingdom Trust, Matt Jennings said:
“We serve both institutional and individual investors by providing qualified custody, which gives our clients the framework they need to ensure compliance with their regulators using clear and transparent reporting.”
A surprise move
The news came as something of a surprise as the insurance industry is widely considered one of the most traditional and conservative industries, but it appears they are becoming more interested in alternative markets. In recent months, it also came to light that US-based underwriters such as AIG, XL Catlin, Chubb, and Mitsui Sumitomo Insurance have also shown interest.
Whilst Lloyd’s may have taken a big step, it seems that they are treading carefully and have made no comment on the news that some of their managing agents are offering crypto-theft cover. This has been put down to a degree of hesitancy in the marketplace as a whole, in terms of cryptocurrency as an asset class.
Act with caution
Just as recently as last month, Lloyd’s of London issued a directive to all syndicates that warned them to act with caution in terms of cryptocurrency assets, as well as ensuring that their managing agents have the required level of expertise when it comes to underlying risk.
President of the SDBIC, Jerry Pluard commented:
“About 10 syndicates in Lloyd’s have indicated a willingness and are somewhat active in evaluating crypto exposures,” Pluard said, continuing:
“Of those 10, I would say there are five that have the level of expertise that allows them to be comfortable enough to do the analysis and underwriting of the risk, and then the other five will follow on with those leads in writing exposure.”
It seems that Kingdom Trust were able to secure underwriters from the Lloyd’s market place due to a combination of respected security protocols, as well as new technologies. Features such as proof of reserve, external oversight, whitelisting of addresses, daily reconciliation audits, and stringent employee due diligence procedures, all played a great importance in securing the confidence of the markets.
More than just a wallet
The solution provided by Kingdom Trust is so much much more than just a wallet, said Jennings, adding that the insurance market is aiming for something more than just a good wallet solution from an unregulated third-party software company.
“A lot of people are seeking insurance for hot wallets or what they call warm wallets and some people even call them cold wallets,” he said. “But I think the insurance market wants to see an entire safekeeping solution that encompasses the entire atmosphere around the private keys.”
This move is considered as a big boost for the crypto-world at a time when the industry is still recovering from the rejection of 9 Bitcoin ETFs by the SEC and many stakeholders are interested to see, who else will make their first move into the sphere.