Expert Q&A - Web3 insurance
What do web3 companies need to know about insurance?
We sat down with our in-house expert Ben Davis, Head of Digital Assets, to answer the key questions about insurance and help you understand all you need to know if you're operating in the web3 space.
Whether you're just getting started, or finding your current insurance provider is struggling to keep up with your evolving needs, find out how we help businesses in the digital asset space. Looking for more information? Get in touch with our expert team.
Why should a web3 business consider purchasing insurance?
Any tech business faces risk every day, and in web3 it’s no different. Web3 businesses should consider transferring that risk to an insurance provider’s balance sheet to free up working capital, meet contractual requirements and protect themselves from the host of risks they are facing.
A number of our clients have also found that going through the Superscript due diligence process has been incredibly beneficial for them as it highlighted areas for improvement that weren't previously considered. This means the process of applying for insurance alone has benefits for our web3 clients.
What covers are typically bought by web3 businesses?
The covers required by web3 businesses change depending on what exactly the business does, but typically we'd be talking about the following insurance:
- Directors' & officers' insurance, to protect senior employees personally against claims of mismanagement, allegations of neglect or breach of duty, or misleading statements.
- Tech errors & omissions/professional indemnity, to cover mistakes in the service provided, compensation claims, contract disputes and intellectual property disputes.
- Cyber insurance, to cover risks that come with storing and handling data when running a business.
- Crime or specie, to cover theft of, or damage to, the assets themselves.
What is the question clients ask most about web3 insurance?
The questions normally revolve around what the policy covers, the cost and how long it will take to get set up.
For all new clients we provide a digital asset team overview document that highlights our capabilities and what to expect in the process, to manage expectations as much as possible and as early on as possible.
What our expert says
Ben Davis, Head of Digital Assets
A common misconception is that digital asset insurance only pertains to insurance of the digital assets themselves, rather than other business risks.
There are a number of other policies and exposures web3 businesses should be thinking about, often when we speak with our clients they are surprised that they hadn’t thought about this before.
Why is managing risk important?
Insurance is there to protect a business' balance sheet and assets, so by not having insurance in place you could be opening yourselves up to large financial loss that could otherwise be avoided.
Sometimes for a business to win, they just need to manage how to not lose. It sounds a bit simplistic, but in reality some of the most successful businesses are successful because they effectively manage their downside risk. Insurance is really the perfect tool to achieve this.
By managing your company’s risk with an insurance policy you free up time, money and personnel to achieve your company’s goals and ambitions. We also believe that insurance is crucial to helping consumers build trust in the ecosystem. By covering yourselves with Superscript you show your clients that you’ve been audited by the best and they can work with you with peace of mind.
How has the market for insurance changed for web3 businesses?
Web3 insurance has been on a journey and I’m proud to say that now more insurers than ever before are opening their doors to underwriting risks in this incredible industry.
As the market opens up to more capacity providers we're excited to see this trend continue so the web3 industry can enjoy the same access to cover enjoyed by other technologies.
How might the market for web3 insurance change?
Normally, if a business is being regulated they will have to hold some sort of professional indemnity policy or even crime or specie insurance depending on their business model.
We predict that this is going to be the biggest change in the digital asset insurance space, as more regulators and suppliers begin to require insurance cover for all digital asset-related companies.
How we work with Web3 businesses at Superscript
At Superscript, we aren’t your typical insurance broker. We properly vet all of our clients and even do pre-underwriting services for the companies that pass our first due diligence stage. We review all documents and materials and provide our own in-house underwriting view to the insurers we work with. This means that we can properly tell our client's story, gain important trust with our underwriting partners and as a result secure better coverage for web3 businesses.
We are also part of the community. We attend events, hold and trade digital assets and speak regularly around London and internationally on the subject of digital assets and insurance.
Another area we innovate is in our products, we create our own digital asset insurance products and partner with ambitious underwriters to provide much-needed capacity to web3.
See more from our expert
Ben has over 10 years experience in the insurance industry, and in the past four years has focused on the crypto-insurance space and emerging technology. Ben has a deep specialism in blockchain and cryptoassets and wrote the first ever UK consumer Bitcoin theft insurance policy.
As Head of Digital Assets at Superscript, Ben heads up our Digital Asset Insurance team to set a new standard for crypto, digital asset and DLT insurance, guiding web3 businesses through the complex and ever-evolving world of web3 insurance.
This content has been created for general information purposes and should not be taken as formal advice. Please always refer to your policy documents for full details around exclusions, terms and limits of your customised cover. Read our guide to understanding your policy documents.
