Insurance companies are considering the launch of kidnap and ransom policies aimed at wealthy cryptocurrency holders, driven by increasing concerns over kidnappings of crypto entrepreneurs.
K&R Insurance for Crypto Holders
U.S. insurance companies are reportedly contemplating launching products specifically for wealthy cryptocurrency holders. The insurers hope these products, known as “kidnap and ransom (K&R) policies,” will appeal to crypto entrepreneurs concerned by rising incidents of cryptocurrency entrepreuners with large holding being kidnapped and tortured by criminals.
According to an NBC report, insurance companies aim to capitalize on these fears, which were evident at the recent Bitcoin Conference in Las Vegas. While considered a small niche, K&R insurance has historically proven to be an exceptionally lucrative segment for underwriters, despite the remarkably modest premiums typically associated with these policies. The niche has consistently delivered substantial profits, standing out as a high-margin offering within the broader insurance market. Insurers hope the growing sense of insecurity will drive super-rich cryptocurrency entrepreneurs to consider K&R policies.
However, besides taking K&R insurance policies, wealthy crypto entrepreneurs should also consider making a portion of their digital assets not easily accessible. Ryan Lackey, chief security officer at Evertas Insurance, adds that publicizing this will help deter potential kidnappers.
“The ideal product in the space is actually something where you can probably not get access to funds beyond a certain amount, and then you can pay them a small amount,” Lackey was quoted as saying. “This has to be something that’s widely adopted, that’s known by the dumbest possible kidnappers in the world, because they’d otherwise have no reason to believe it.”
Despite promising significant returns, K&R insurance policies for large crypto holders are seemingly dependent on the customer’s cyber and physical security. This means a customer’s security must be evaluated before an insurance company offers a K&R policy. Joseph Ziolkowski, CEO of crypto insurer Relm, suggested that premiums for such policies will be determined by a prospective customer’s security system.
“The way coverage is priced is, there’s effectively a base rate, and that base rate gets debited and credited based on favorable or unfavorable circumstances related to a particular risk,” Ziolkowski stated. “If someone has 24/7 personal security detail traveling with them at all times, that obviously would be a credit and would affect premium.”
While for some known wealthy crypto holders, withdrawing from public life has proven effective, this approach is not an option for those whose work requires them to be visible. This leaves them with no option but to consider insurance products such as K&R policies.
Source: Bitcoin
