Global reinsurer Swiss Re said in a report that crypto assets could lead to unexpected losses and opportunities for new forms of insurance coverage.
According to the report, certain crypto asset May be covered implicitly by existing property or cyber policies. “As a result, there could be a significant increase in claims in those lines of business,” it said.
Furthermore, risky investments in crypto assets and unexpected associated tax liabilities can jeopardize the viability of the company and trigger credit and surety claims.
Swiss Re also warned that attempts by individuals and companies to hide money from the authorities by investing in crypto assets could see an increase in the number of court cases and cases where illegal activities can be covered under the terms and conditions of the insurance policy. is not included from. D&O claim
D&O insurance claims are paid to the directors and officers of the company or organization for damages or reimbursement of defense costs if legal action is taken against them.
Swiss Re warned: “Due to ESG issues with crypto assets (such as energy consumption), regulatory uncertainties, and the high volatility of the asset, trading with crypto assets can result in financial loss and damage to reputation.”
The findings are part of the 10th edition of Swiss Re’s SONAR report, which highlights emerging risks for global insurers.
In previous reports, the reinsurer flagged a global pandemic, geopolitical conflict, rising inflation and an unstoppable climate crisis as potential risks.
In the latest report, Swiss Re warned that theft of crypto assets is a growing concern.
“Hackers reportedly garnered several billions of dollars in virtual assets in 2021. An open question for insurers in this regard is whether certain crypto assets are contained by existing assets or cyber policies,” the report said.
Notably, reinsurers have not yet made significant investments in this area due to the high volatility of assets and other uncertainties.
The company highlighted that with the rapid development of the crypto asset sector, the question of the insurability of such assets becomes more relevant with the new cover.
The report explores other emerging risks related to public health and medical science, challenges in manufacturing, the commercial space age, quantum computing as well as an increasingly climate, lack of confidence in infrastructure and health threats.