The crypto industry is still in the process of establishing: the variety of cryptocurrencies is already available, but the related services show the slower pace of development. Traditional financial institutions are slow in enhancing presence in this sphere. One of the services that the crypto industry misses badly is insurance. But the situation may change as one of the most famous insurance marketplaces – Lloyd’s of London – has quietly entered the market.
The more people invest in the cryptocurrencies, the more urgent becomes the need for the high quality insurance services. Even though the blockchain technology is known for the incredible level of security, there is always a possibility of theft or even a natural disaster. The ultra-conservative position of the insurance companies is a stop factor for institutional investors. But the situation is about to change.
Major insurance marketplace is already entering the crypto sphere. Kingdom Trust, an independent qualified crypto custodian, has added insurance coverage to the list of its services. The coverage is provided through the Lloyd’s marketplace, which means that this British insurance market has accepted the crypto assets.
The positive change on the insurance market is largely due to the combination of innovative technology and battle-tested security protocols developed by Kingdom Trust. Matt Jennings, CEO of the company, 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.”
The list of factors that has ensured Kingdom Trust’s cooperation with Lloyd’s includes such points as proof of reserve, daily reconciliation audits, multi-geographic location disaster recovery program and other features. However, the key factor was the usage of cold storage for all operations. The hot storages increase the risk of the insured event occurrence – and keep lots of insurance marketplaces away from the crypto sphere.
Kingdom Trust did a great job bringing the insurance services to the crypto market. The broker that arranges the insurance cover is Illinois-based Safe Deposit Box Insurance Coverage which is one of Lloyd’s managing agents. Kingdom Trust possibly had a choice as AIG, XL Catlin, Chubb and Mitsui Sumitomo Insurance are also told to be interested in the crypto sphere. The choice fell on Lloyd’s, and some facts explain Kingdom Trust’s decision on the insurance marketplace.
Last month all the syndicates that create Lloyd’s of London got the directive on crypto assets. The document urged the companies to treat cryptocurrencies with caution and recalled the need for specific qualification. It does not sound like a hearty welcome to the crypto world, but this directive is an indicator of Lloyd’s intentions. While most insurance marketplaces ignore the crypto sphere, Lloyd’s is slowly learning to benefit from it
Coinspeaker.com BY ALEXANDRA SAYAPINA ON TUESDAY, AUGUST 28TH, 2018