The Ideal Crypto Wallet Insurance Should Cover Hacks, Theft, and Fraud: Survey

Hacks, thefts, and fraud are the three most significant risks for crypto asset holders, according to a joint survey Etherisc conducted with global insurance companies Aon and Swiss Re.

The goal of the survey was to better understand the needs for crypto wallet insurance solutions from experienced users and potential consumers alike.

Software bugs, loss of keys, and third-party bankruptcy completed the list of the main dangers perceived by the 375 people who participated in the survey in October. Of those, a 47 percent hold crypto. Perhaps surprisingly, considering the unpredictable nature of the nascent industry, respondents seemed less worried about regulatory and market volatility risks, according to the survey.

The results reinforce Etherisc’s view that there is a crucial need for crypto asset insurance solutions and a clear lack of offers. A resounding 75 percent would feel better if their crypto wallets were insured, but fewer than 5 percent actually have some protection element, according to the poll.

The study also yielded some interesting insights into the crypto habits and preferences of our community:

Of those holding crypto, a 36,5 percent has less than 10,000 dollars, a 38,5 percent holds between 10,000 and 100,000 dollars, and a 25 percent has more — with almost 7 percent with more than 1,000,000 dollars in crypto assets.

Around 60 percent of respondents prefer to own their crypto wallet. Hardware wallets lead the preference, followed by software wallets.

Still, some people are using paper or multi-signature wallets and we even have some ‘mega minds’ that use brain wallets to store their keys.

24 percent of participants said they use a third-party platform to store their assets, mainly crypto exchanges.

Among those using a third-party platform, roughly a third would prefer to buy the insurance themselves from a trusted insurer or broker, a third would prefer to buy the insurance directly from the third-party platform and the remaining third would prefer to have their assets with a third-party platform backed by a trusty independent insurer.

From decentralization theories to working products

As a platform for decentralized insurance products, at Etherisc we believe that we need to team up with traditional players to leverage the blockchain potential for the insurance industry, including advance wallet insurance solutions. That is why we were so pleased to team up with risk solutions provider Aon and reinsurance corporation Swiss Re for the survey. And, in fact, this was one of the main lesson from the second Decentralized Insurance Developer Conference (D1Conf) on October 29, 2018: the conversation has evolved from how decentralization can impact the insurance sector to the emphasis on developing new services and products.

We are working hard to develop crypto insurance solutions, including an insurable multisig wallet to help develop protection against the risk of theft and hacks with a target coverage of up to $1 million. The wallet insurance market will bolster individual users’ involvement in cryptomarkets and expand when custodians and institutional investors arrive into the space asking for a usable and safe solution for storing crypto funds.

More use cases for a better understanding

But the survey also showed that many people remain on the sidelines of the cryptomarkets, with half of the participants holding no altcoins at all. This shows once again that one of the main hurdles, especially for traditional insurance providers, is the lack of information about cryptocurrency.

As Hugo Wegbrans, Chief Broking Officer Europe, Middle East & Africa at Aon, said during the panel discussing insurance for cryptocurrencies at the D1Conf:

“There’s a lot of misunderstanding outside of the cryptocurrency community. There’s a big education gap, and it’s a big problem. It might come as a surprise, but no one understands cryptocurrency, which is part of the reason why there are only a few investments.”

For that reason, Etherisc is partnering with a wide range of allies, from insurance titans such as Generali Suisse to service providers for the insurance industry such as inactaAG to non-profit groups such as Oxfam. This all shows potential allies and investors the vast possibilities of blockchain for risk diversification and what that means: more and better insurance for everybody.