South Korean Insurer To Offer Crypto Exchanges Hack Insurancebr>
Hanwha Insurance, a major South Korean insurance company, will reportedly begin offering insurance for crypto exchanges that covers hacking damages.
According to a report by local media Asia Times, unlike cyber insurance products that only compensates for the leakage of personal information, Hanwha’s new insurance will cover money stolen due to hacking on crypto exchanges. The insurance rate will reportedly be based on the risk generated by an exchange.
“We plan to start negotiations with individual exchanges for insurance next month,” Hanwha said. “It is not a product that has to be compulsory, but it can be outlined if we discuss how much demand there will be. Even if the exchange wants to join, it will require as much coordination as the insurance and reinsurance companies need to meet in order to get insurance.”
Some of the major crypto exchanges in South Korea have been insured, inlcuding Bithumb for $5.3 million, Upbit for $4.5 million, Coinone and Korbit for $2.7 million each. However, none of them includes coverage for hacking damages. The report states that crypto exchanges are hesitant to take out insurance if sufficient compensation is not provided or the premium is too high.
“A cyber insurance can be a means of protecting investors from hacking, but there is a view that if insurance premiums or guarantees are not appropriate, it is not necessary to sign up for insurance,” A Cipher Exchange official said. “Some exchanges have a system that compensates investors in full if they are hacked through the creation of funds.”
In June of this year, the Korea Blockchain Association announced that it was in talks with Hyundai Marine & Fire Insurance Co. and Hanwha General Insurance Co. over how crypto exchanges can take out an insurance policy. The association said that it has been continuously holding negotiations with insurers from April on behalf of its 23 member exchanges.
However, due to the hacking of Bithumb, which caused KRW35 billion ($31M USD) in losses, as well as multiple other hacking incidents, insurance companies are having second thoughts in doing business with the exchanges.
“The Korea Blockchain Association emphasized a stronger internal control system and security at the earlier sessions,” an anonymous insurance industry official said. “But we cannot trust it as even the largest cryptocurrency exchange in South Korea was exposed to cyber attacks. There are no statistics related to the risks of virtual currencies both at home and abroad and it is still not sure whether an insurer can accept exchanges as its policyholders as a group, which are smaller and riskier than Bithumb.”