The insurance industry has always outshined in protecting the assets of individuals and businesses. Whether people want to save their property, lives, health, etc., insurers promise to refund for all the losses caused by setting some particular premium amount that one has to pay.
Besides all these, recently, a new threat was intimidating businesses in the growing digital world-“cybercrime.” Cyber crime disrupted top brands of the world like Yahoo- The CEO of this huge email company accepted that approx. 273 million users’ passwords and usernames were exposed to cyber attackers. More so, Google- a popular site also faced such attack in September 2014.
According to Google, approx. Five million usernames and passwords were leaked on Russian forum site. These incidents were happening since then, on which, insurance firms did some in-depth analysis, and the outcome was- cyber insurance. They introduced cyber insurance for businesses to protect their reputation from cyber criminals and get the maximum refund of their losses.
Now the term that is emerging across the world is Crypto-currency! Businesses are using crypto-currency for secure transactions; however, again hackers are looting banks by hacking their crypto account. On which, insurers are still debating!
Do you what crypto-currency is? To understand crypto-currency one should understand the concept of Blockchain comprehensively.
What is Blockchain?
To start with Blockchain, let’s take a look at the history of Blockchain. Well, before it was jolted with crypto-currency- this idea was introduced in computer science, exclusively in cryptography and data structure domains. The embryonic form of the Blockchain was the harsh tree, also named as Merkle tree. Ralph Merkle established this data structure in 1979 to handle the verifications and data between two computer systems.
While using a peer-to-peer network of computers, it was essential for businesses to ensure that the data is valid and nothing was changed or altered during the sharing process. Blockchain actually eliminates the sharing of false data, helping firms to maintain the integrity of the data being shared across the network.
As the technology begins to evolve, in 1991, this tree was utilized to form a “secured chain of blocks”- sequential of data records, each connected to the one before it. The latest record in this chain would contain the entire history of the chain, which gave birth to “Blockchain.”
And in 2008, Mr. Santoshi Nakamato introduced this concept again for the sake of businesses. To simply put across, it involves a secure history of data exchanged so far, utilizing a peer-to-peer network for a better time to market, authenticates each exchange and everything in Blockchain can be accomplished freely without any central authority.
With this crypto-currency became popular! Now to make you understand in simple terms what crypto-currency is, I have outlined five factors below:
- Crypto-currency is a digital currency generated and deposited electronically in blockchains
- It uses encryption practices to control formations of monetary units and to authenticate the transfer of funds. Therefore, it is very secure.
- It does not have a physical form, and so it is not exchangeable in other goods like gold
- Its supply is not dogged by any central bank of authority, and the network is entirely decentralized
- Bitcoin, Namecoin, Litecoin, and PPcoin are a few instances of cryptocurrencies.
However, being such a secure network, attackers are still hacking accounts of businesses. Recently on November 7th, 2018, Bitcoin mining giant, a China-based firm, filed a lawsuit in the US District for the Western District of Washington. According to them, the unknown hacker infused Bitmain’s Binance account in April and stole all the funds of the company. The hacker transferred approximately 2.3 million in their crypto wallet. And such cases are increasing day-by-day.
Hearing all such grumbles, major insurance agency management are offering protection against crypto-currency theft, ready to tackle these scary challenges. However, only a few insurers have begun to sell such insurance policies including XL Catlin, Mitsui Sumitomo Insurance, and Chubb. Other insurers reported to Reuters that are still in analyzing phase to provide better coverage to companies who deal with bitcoins.
Insurers are facing challenges to evaluate the risk as deciding the product here is something very challenging. More so, many companies don’t provide their complete information to insurers due to privacy standards and to save the brand image, which becomes more daunting for insurers to assess the risk.
According to surveys conducted by top researchers in the best insurance companies, many respondents said that, “It is an expensive product that companies can’t afford”, “We provide coverage for employees stealing cryptocurrency from the firm, but no from hackers”, and few said “We are looking at it, but it does it not make sense to offer a market for that”.
One of the registered New York trust company, Gemini, carries state-mandated law against employee theft, fund transfer fraud, and computer fraud, but does not offer coverage for hacking also mentioned that, “The key is to look for regulatory mistakes, which confirms that an exchange is doing what it should be doing so that it doesn’t reach to the point where you have to rely upon an insurance policy”.
However, Lloyd’s broker Henry Sanderson, who supervises cyber and technology coverage for Safe online, diplomatically says that crypto-currency insurance can help young entrepreneurs and industry matures while creating a new business for insurers. He said “Our globe is maturing and evolving, if we don’t embrace it now, it will be a missed opportunity for insurers”.
So the debate on this will keep growing, but surely a reliable solution will come out- maybe in 2019!
Keep yourself updated and your business secure!
- Crypto Bots: A Beginner’s Guide to Cryptocurrency Trading Tools
- Turning Life as a Cryptocurrency Trader into a Content Goldmine
- Top 20 Bitcoin Wallets in 2019
- 8 Industries That Blockchain Technology Will Transform Radically and How
Author Bio: Diana Krall, is a business strategist at ISW. She has been a great contributor to the insurance industry since years. She is passionate about sharing information with insurance professionals regarding insurance back office outsourcing, policy & commission management support through her writings. You can connect with her on Linkedin.