Arch and Marsh team up to insure digital asset storage

Arch Insurance UK has partnered with Marsh to launch Blue Vault, providing insurance protection for digital assets.

Specifically, Blue Vault insures the secure storage facilities for digital asset private keys, the alphanumeric data enabling the transaction of digital assets, such as cryptocurrencies, on a blockchain.

Blue Vault allows custodians of digital assets to transfer digital asset storage risks through the life cycle of private key management and storage. Insurance is available globally, with limits up to $150 million, covering the loss of digital assets due to internal and external theft, including employee collusion, and the physical damage or destruction of private keys.

Its creators say it is the first insurance solution of its kind to be placed in the specie insurance market. It is backed by syndicates Arch 2012 and Canopius 4444, as well as other syndicates and underwriters at Lloyd’s of London.

James Croome, Arch’s vice president of fine art and specie, said: “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.”

Ankur Kacker, vice president and specie expert on Marsh’s digital asset risk transfer team, said: “The secure storage of digital assets will continue to evolve as the regulatory landscape for this new asset class becomes clearer and financial institutions increasingly expect insurance to cover digital asset exposures.”

Nicholas Berry, corporate insurance partner at Norton Rose Fulbright, which provided legal and technical consulting support in the creation of Blue Vault, said: “Obtaining a copy of a private cryptographic key is usually just as valuable as owning the original. Some custodians of keys for cryptocurrency accounts hold the equivalent of hundreds of millions of dollars in cryptocurrency. There are subsequently inherent challenges for systems that create, store, back up, retrieve and destroy these keys securely.”