BitGo has secured the first-ever comprehensive Bitcoin theft insurance from XL Group insurance companies. Bitcoins secured with BitGo’s multi-sig platform will now receive full underwriting protection.
‘Another Layer of Protection’
Multi-sig security firm BitGo announced today that it has established the first-of-its-kind insurance coverage for Bitcoin theft from the global, A-rated XL Group of insurance companies. The policy issued to BitGo is the first comprehensive coverage issued by a major global underwriter to a Bitcoin company.
Until now, Bitcoin “insurance” has just meant bonded cash set aside to cover a limited set of losses or some other equivalent. Now, all of BitGo’s paying customers will be eligible for protection under the XL policy for up to US$250,000 in covered theft claims just by signing up for BitGo services. Its customers can also increase the amount of protection available to them for a 1 percent annual fee.
John Coletti, Chief Underwriting Officer, Cyber and Technology Insurance, XL Group stated:
“In collaborating with BitGo and Innovation Insurance Group, we tailored a first-of-its-kind insurance product to help protect the rapidly growing Bitcoin industry.”
“BitGo’s multi-signature architecture delivers a significant level of security, realizing how seriously they take cyber security; we confidently developed a comprehensive insurance solution that offers BitGo and their customers another layer of protection,” he added.
It is its liability policy that goes well beyond the narrow crime policies previously adopted by some Bitcoin vault providers. BitGo customers who opt in to the program are protected from acts, errors, or omissions of BitGo technology, processes, and employees, including external hacking incidents and employee theft.
Both hot wallets and cold storage are eligible for coverage by the policy. In the event of a covered loss, the policy would reimburse BitGo’s customer, as a direct loss payee, for the value of the lost or stolen bitcoins, subject to the terms and conditions of the insurance policy with XL Group. The policy also enables BitGo to work directly with its customers in the management and resolution of such incidents.
Industry Veteran Forays into Bitcoin
BitGo has also teamed up with 30-year insurance industry veteran Ty Sagalow, president of Innovation Insurance Group and CEO of Bitcoin Financial Group. Sagalow, a former chief underwriting officer and chief innovation officer at AIG, developed and negotiated this new insurance product with XL Group.
Sagalow has been responsible for numerous insurance innovations over his career including cyber-insurance, Y2k insurance, entity coverage, reputation insurance and intellectual property collateral insurance.
“We have seen early attempts at insurance in the Bitcoin market, such as those based on a captive model funded with cash reserves or ‘crime’ policies that solely cover employee theft of cold storage keys,” stated Sagalow. “While this was suitable for Bitcoin’s formative years, it does not scale to the requirements of today’s ecosystem.”
He added:
“BitGo’s multi-signature technology alters the threat profile to the point that a properly balanced insurance product can for the first time be brought to market at a price in line with typical cyber risk.”
At the time of this announcement, BitGo offers two major services to its customers: BitGo Enterprise, a popular institutional Bitcoin web wallet, and BitGo Platform API, a scalable set of tools and services that allows any developer to rapidly deploy operational infrastructure for their Bitcoin business. The Bitcoin theft insurance provided by XL Group covers the risk of theft or loss of bitcoins secured with both services.
“We are proud to partner with XL Group and Innovation Insurance Group on this game-changing insurance product,” said Will O’Brien, CEO and co-founder of BitGo.
“The entrance of an underwriter of XL Group’s size and reputation signals that the technologies and standards for bitcoin security, like multi-sig, have reached a threshold of viability to take the industry to the next level. For our large enterprise customers, an insurance-backed guarantee is the final missing ingredient for peace of mind in a robust security software offering.”
BitGo, which raised US$12 million back in June 2014 in Series A round of funding, pioneered a technology known as multi-sig in 2013. It has partnered with numerous companies such as BitQuick, TeraExchange, and BitFury to offer greater protection for customer funds. Just last month, BitGo launched the first draft of the CryptoCurrency Security Standard in collaboration with C4, a non-profit organization specializing in crypto security certifications.
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