Non-fungible tokens (NFTs) are a $41 billion market, and general insurance is available wherever there are several zeros.
That is not the case with NFTs, a segment of the bitcoin business worth less than 1% two years ago.
However, with IMA Financial’s announcement today (March 3) that it is investing in a research and development centre to figure out how to assess risk and underwrite NFT coverage, it appears that the lack of coverage is about to change.
Gemini, Coinbase, and Crypto.com, three of the most popular cryptocurrency exchanges, each have insurance for assets in cold storage accounts valued at millions of dollars, while equity and crypto trading platform Robinhood has Lloyd’s of London coverage for its holdings.
In March, reinsurance giant Aon launched a trial programme to give coverage to digital asset firms, partnering with CoinCover to provide hot wallet coverage.
The project “allows us to explore the risks associated with digital and meta assets from within the metaverse, so we can better prepare our clients to manage such risks,” said Paul Washington, executive vice president of IMA Financial Group, adding that the company takes pride in finding “innovative and effective risk management solutions.”
Because there is so much thievery, IMA Financial has its work cut out for it. For one thing, NFTs are a difficult commodity to value because, like great art, they are only worth what the market believes they are — and this is heavily influenced for insurance reasons.
Another problem is that they appear to be just as subject to theft and hacking as bitcoins. On Twitter earlier this month, an NFT collector claimed that he had been hacked after being fooled into clicking on a link that gave the thief access to his digital wallet.
The burglar took his NFT collection, which included a dozen highly sought-after Bored Ape Yacht Club and Mutant Ape Yacht Club treasures worth more than $2.5 million, and rapidly resold them for $700,000 before word of the robbery reached NFT marketplaces.
Get started with as little as $10.