According to Coindesk's September 24 report, Marsh & McLennan, the world's largest insurance brokerage firm, has tailored an exceptionally generous and comprehensive insurance plan for a new cryptocurrency provider called KNØX.
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Montreal-based KNØX announced on Tuesday that it is launching a cold storage service for wealth management companies and hedge funds to save encrypted wallet private keys offline. To give potential customers peace of mind, Marsh's customized insurance services include claims for external theft and internal collusion, covering the value of all assets held.
Alex Daskalov, co-founder and CEO of KNØX, explains that insurance policies involving cryptographic assets are typically shared among multiple clients in a hosting organization. For example, a custodian with $1 billion in assets advertises that its policy amount is $100 million, that is, only 10% is insured. Daskalov believes that in this case, the customer’s sense of security is completely false. If customers suffer a loss of $100 million, they can only get $10 million in damages.
Daskalov told CoinDesk:
“KNØX's insurance plan is tailored by Marsh to eliminate this ambiguity.”
“We often see that people buy an insurance, but the total value of the insured object far exceeds the upper limit of the policy. So for us, an important guarantee is that when customers choose our platform, their assets All value will be guaranteed." This is not to say that there is no cap on the amount of insurance. Daskalov admits that there must be a relatively high hard top, but he did not specify how much the hard top is.
When asked if KNØX is ready to provide hosting services for any customer holding more than $100 million and to ensure security, Daskalov replied that this is "not a problem." (Comparing this with recent figures, the largest insurance coverage currently reported in the encryption field is Coinbase insured for $255 million).
Jesh Senior Vice President Jennifer Hustwitt told CoNeDek that the insurance coverage provided by the KNØX solution was underwritten by the insurance company Arch and supported by a consortium of Lloyd's of London.
Encrypted insurance business
KNØX recently raised $6.2 million in funding, led by Initialized and iNovia, and other participants include Fidelity Investments Canada, FJ Labs and Ferst Capital.
Daskalov said that for 100% of the client's assets to be custody and insurance, KNØX will charge 1% of the service fee based on the amount of assets, and decrement according to the size of the business. He said that although Service Level Agreements (SLAs) are more conservative, it usually takes only an hour to take the customer's assets out of the cold storage for trading.
Although crypto insurance is rare, blockchain security company BitGo buys $100 million in insurance from Lloyd's, and Coinbase collaborates with Ain, the second-ranking insurance broker, to explore new directions. Insurance has made headlines more and more frequently. Aon is also working with hosting providers Anchorage and Volt.
Hearst said that in the past six months, there has been a net increase in insurance capacity against digital asset risk. Some operators are starting to participate in projects that have not been involved before, which will gradually increase the capacity and scale of insurance transactions. She said:
“At any given time, the total capacity will depend on risk events one after another. However, in the insurance market for gold and silver and financial institutions, the potential insurance capacity is as high as $750 million to $1 billion.”
Hearst concluded that it is important to note that the participating operators and operational capabilities will change from month to month.
“Our current work metrics are as high as $1 billion. Every transaction we make has a new breakthrough.”