Cryptocurrency is a digital or virtual asset that relies on cryptography to verify and secure transactions. Most cryptocurrencies have no central regulatory authority (i.e., the federal government), but rather run on decentralized systems through the use of blockchain technology to record transactions and assign new “tokens.” While blockchains provide a high sense of security and self-regulation, they are not risk-free. The insurance market has been slow to enter the cryptocurrency world, but some insurers have, and others are starting to explore this new terrain. In this blog, we provide a short overview of what you should know about cryptocurrency insurance in order to decide whether it’s right for you and/or your company.

Continue Reading Cryptocurrency Insurance 101

According to ZDNet, hackers successfully breached eleven major cryptocurrency exchanges in 2019 and stole more than $283 million worth of cryptocurrency (view reference here). We should expect this number to increase in 2020 as governments and cybersecurity experts warn that hackers will seek to take advantage of the coronavirus crisis to infiltrate corporations and as a vast number of employees move to teleworking. Specifically, cryptocurrency owners who maintain “hot wallets” should be particularly vigilant in protecting their assets because hot wallets are more vulnerable to theft and may not be covered by current insurance policies. Lloyd’s of London, however, recently announced the development of a new policy that will provide coverage for hot wallets. This blog has previously discussed the insurance industry’s attempts to develop new policies and endorsements to cover risks related to the cryptocurrency industry. See relevant past articles: Prepare for the Future With Cryptocurrency Insurance and The New Money: Cryptocurrencies and the Role of Insurance.
Continue Reading Cryptocurrency Insurance for “Hot Wallets”

Often called the “wild west,” the cyber insurance marketplace offers a wide variety of policy forms that vary drastically in the scope of coverage provided.  This is further compounded by the relatively small amount of case law analyzing cyber policies and the quickly-evolving cyber risks that companies face.  Insurers are quick to deny coverage based on the many exclusions in cyber policies, often leaving policyholders with the option of either spending money to fight their insurer in court or accepting the carrier’s denial.  If your company is insured by a cyber policy (or, for that matter, any type of an insurance policy), you should carefully review the policy, understand its exclusions, and, where possible, take steps to implement practices and procedures to ensure that your company’s activities do not fall within the enumerated exclusions.  Cyber insurers are often willing to modify exclusions in cyber policies to carve back certain coverages, but only when asked to do so.  Analyzing the policy and negotiating with the carrier on the front end, before a claim occurs, can save your company both time and money on the back end if a claim arises. 
Continue Reading Common Exclusions Invoked by Cyber Carriers to Deny Coverage

Selecting an appropriate cyber insurance policy can seem daunting. There are a number of different cyber events that have the possibility to impact businesses differently based on a number of factors, including the company’s network design and cyber security readiness. The market for cyber insurance policies does not have a widely-accepted form that is predominantly used by carriers, brokers, or policyholders, resulting in approximately 70 carriers drafting their own cyber insurance policies, many of which are negotiable. Lastly, the risks and technology at issue evolve quickly, adding uncertainty and the potential for a “new” event that may not be covered appropriately by your company’s current policies.
Continue Reading Evaluating Your Company’s Coverage for Ransomware Attacks Under Its Cyber Insurance Policy

For approximately the past decade, cryptocurrencies were used by those who wanted to transact business anonymously and without oversight or restrictions imposed by any governmental authority.  More recently, the concept of cryptocurrencies has been used to raise capital outside of traditional financial structures.  Indeed, the rise of raising money through the issuance of “virtual tokens” using “Initial Coin Offerings” (“ICOs”) has caused a sharp rise in the prevalence and market value of cryptocurrencies.

Those involved with cryptocurrencies believe that their virtues include stronger security against theft, easier transactions, and insulation from government-induced currency fluctuations, among other things.  But the inescapable reality is that hackers, technical errors, and fraud happen.  In addition, regulators have been taking notice and have been attempting to flex their authority, although the manner in which any given regulation applies to cryptocurrencies is far from certain.  One thing that is certain, is that the cryptocurrency “industry” poses unique and evolving risk.  Given this, the insurance industry is also engaged in attempting address the needs of this emerging market, although underwriters can be expected to rigorously assess the risks posed, and insurance procurement can be a challenge for some.
Continue Reading The New Money: Cryptocurrencies and the Role of Insurance

Welcome to The Perkins Coie Tech Risk Report, a source for updates on, and analysis and interpretation of, insurance issues relevant to emerging technologies. We will address coverage issues related to cyber coverage, privacy, digital assets like cryptocurrency, Blockchain and other emerging technologies. The blog is written for start-ups and other companies dealing with emerging

Cryptocurrencies, including bitcoin, may be the wave of the future, as more and more companies and countries accept them as valid forms of currency. As with any new technology, however, the potential for risk and error is prevalent. Although cryptocurrencies are backed by various blockchains designed to reduce risk, a certain amount of risk is unavoidable. And where there is risk, insurance follows.

For example, the Mt. Gox scandal, which is speculated to involve a bitcoin insider taking bitcoins from the exchange, is estimated to result in losses of more than $400 million. Traditionally, insureds attempted to find coverage for risks related to cryptocurrencies by finding novel constructions of provisions in extant insurance policies. Often, the insured was simply left without any coverage. But certain insurers have begun taking the bull by the horns and marketing a new kind of product—cryptocurrency insurance.
Continue Reading Prepare for the Future With Cryptocurrency Insurance