Hanwha South Korean Insurance Firm to Cover Crypto Exchange Hacks
Hanwah Insurance, a leading South Korean insurance company, will begin covering cryptocurrency exchanges against hacks and loss of coins.
Hanwha Insurance, one of the leading insurance companies in South Korea has announced that it will be providing insurance cover for cryptocurrency exchange hacks resulting in loss of coins.
Hanwha to provide hacking insurance
Hanwha Insurance, a key insurance firm based in South Korea has announced that it will be introducing an innovative type of cyber assurance next month.
A spokesperson of Hanwha Insurance told The Asia Times (translated):
“We plan to start negotiations with individual exchanges for insurance starting next month,”
The local media outlet noted that the innovative product provided by Hanwha Insurance will cover damages arising from hacking and loss of coins. Currently, Korean insurers only cover losses arising from personal data theft and do not cover losses arising from stolen coins.
As for the rate, the local news outlet reports it will be based on ‘risk generated by an exchange.’ Risk will be assessed by insurers (and reinsurers) in coordination with the exchanges seeking coverage.
Need for hacking insurance
South Korea has witnessed increased demand for insurance coverage over hacking damages after some major hack incidents rocked the crypto industry.
In January this year, the largest heist in crypto history was recorded after a cyber-attack on the Japanese crypto exchange Coincheck led to the loss NEM coins worth over $500 million.
About a month later, another attack on the Italian exchange, Bitgrail saw hackers make away with Nano coins worth around $187 million.
South Korean exchange Bithumb was also a victim of a cyberattack in June this year, losing an estimated $32 million in the process, in the same month, Coinrail lost about $40 million to hackers.
Following the hacks, Bithumb has enacted two cyber comprehensive insurance policies, one with Hyundai Marine & Fire Insurance Co. and the other with Heungkuk Fire & Marine Insurance Co.
The policies cover the violation of information maintenance, data loss and theft, cyber threats, and compensation for investor personal information leakage, however, CBC News noted that they do not cover hacking damages.
The Asia Times also stated that crypto exchanges may be hesitant to take up insurance policies where enough compensation is not offered, or if the premiums needed are exorbitant.
Crypto exchanges and South Korean policyholders
In June this year, Business Korea indicated that the Korean Blockchain Association had commenced discussions with insurance companies to discuss the offering of insurance coverage for crypto exchanges.
The insurance companies the agency had talks with include:
- Hanwha General Insurance Company; and
- Hyundai Marine and Fire Insurance Company.
The association is made up of twenty-three members which are crypto exchanges, including the four of the major exchanges:
- Korbit; and
A spokesperson from Hanwha insurance said:
“It is not a product that has to be compulsory, but it can be suggested. Providing this insurance will require a tremendous amount of coordination between the insurance companies and the exchanges.”
The association has continued to hold meeting and negotiations with insurance companies on behalf of its members.
The Korean Blockchain Association has faced the challenge of being accepted by policyholders, mainly due to the highly volatile nature of virtual currencies and a lack of reliable custody infrastructure and solutions.
A maturing industry
As each day goes by, the industry keeps on moving forward in the right direction. The latest announcement reveals that large insurers are slowly beginning to have more faith in the crypto industry.
The timing of the announcement comes as many important players such as Coinbase and Goldman Sachs, amongst others, begin offering institutional-grade custody solutions, which can sharply lower coin hacks.
Investors that use insured exchanges are set to benefit the most as it will virtually eliminate the possibility of losing funds.