Arch Insurance (UK) Ltd. and the broker Marsh have launched new insurance protection designed to address the secure storage of digital asset private keys held in traditional vault facilities.
The offering, dubbed Blue Vault, is available globally and provides limits of up to $150 million. It covers the loss of digital assets due to internal and external theft, including employee collusion and the physical damage or destruction of private keys, the companies said.
Private keys are the alphanumeric data that enable the transaction of digital assets, such as cryptocurrencies, on a blockchain.
Arch and Marsh claim that Blue Vault is the first coverage of its kind to be placed in the specie insurance market. Blue Vault is backed by syndicates Arch 2012 and Canopius 4444, plus other syndicates and underwriters at Lloyd’s of London.
“When it comes to the critical risk around the generation and storage of digital assets, it is not just the way sensitive material is stored but a complete and detailed understanding of the entire life cycle of the private keys,” James Croome, Arch’s vice president of Fine Art and Specie, explained in prepared remarks. “A breach at any stage could cause a financial loss for our clients, so it is the secure generation, transfer and storage of knowledge, not simply the possession of data, that is our paramount underwriting consideration. The importance of this distinction cannot be overestimated, and our insurance policy wording was very deliberately constructed to manage this risk.”
With Blue Vault, custodians of digital assets gain the ability to transfer digital asset storage risks through the life cycle of private key management and storage, the companies said.
“This is a significant step forward in digital asset insurance,” Ankur Kacker, vice president and Specie expert on Marsh’s Digital Asset Risk Transfer (DART) team, said in prepared remarks.
Sources: Arch Insurance (UK) Ltd., Marsh