The famous and prestigious Lloyd’s of London marketplace is now providing cover against theft of virtual currencies. The information has been announced on Tuesday by Kingdom Trust, a qualified custodian of over 30 different virtual currencies in the market.
The company is enhancing its services with an insurance that covers theft and loss in case of a natural disaster, courtesy of underwriters in the Lloyd’s market.
Moreover, Kingdom Trust is a qualified custodian that is guarding private keys of troves of virtual currencies with very high standards of security. The intention is to be acceptable to important financial institutions.
In a statement, Matt Jennings, CEO of Kingdom Trust, commented: “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.”
And as we see, insurance companies are becoming more interested in providing covering for digital assets such as virtual currencies. Some companies in the United States, such as AIG, XL Catlin, Chubb and Mitsui Sumitomo Insurance, are keeping a low profile in the market.
Lloyd’s corporation would not be commenting on whether managing agents might be offering cover for cryptocurrency theft. Additionally, the syndicates in charge were not mentioned.
One of the main reasons, it’s related to the lack of knowledge and required expertise in the crypto market and the underlying risks associated with them. Over 10 different syndicates in Lloyd’s indicated a willingness in entering the crypto market and gaining exposure to these assets.
Jerry Pluard, president of the Illinois-based Safe Deposit Box Insurance Coverage (SDBIC), explained that there are five syndicates that have an adequate level of expertise. That would allow them to be comfortable enough to do a correct analysis and underwriting of the risks associated. The other five will be following on with writing exposure.
It is important to mention that the company Kingdom Trust was able to secure underwriters from the Lloyd’s market using a combination of technology and security protocols. Jennings explained hat they used different features such as proof of reserve, daily reconciliation audits, external oversight, whitelisting of addresses, among other methods.
After using a cold storage wallet or system, an inside job becomes the main threat, according to Jennings. Kingdom Trust’s solution works in a very different way. The insurance market is trying to search for more than just a secure wallet solution from unregulated third-parties.
“A lot of people are seeking insurance for hot wallets or what they call warm wallets and some people even call them cold wallets,” Mr. Jennings commented on the matter. “But I think the insurance market wants to see an entire safekeeping solution that encompasses the entire atmosphere around the private keys.”
The industry needed Lloyd’s to underwrite Kingdom Trust. And indeed, that demonstrated that a robust storage system would help reduce the cost for everyone.
As he mentioned, the ‘KT Icebox’ system meant that he could offer crypto cover to clients with no additional cost on the service.
At the moment, there are small and large firms that want to enter the space. And these players are not surprised at all about Lloyd’s syndicate underwriters entering the cryptocurrency world.
For example, chief product officer at DACC (Digital Asset Custody Company), Matt Johnson, said that the company he manages has been looking at different insurance policies in the last months.