Building Customer Confidence with Insurance to Weather a “Crypto Winter" - TOKEN2049 London 2022

um all right so actually before we get started uh with this topic about the insurance for the crypto industry we just wanted to do a very small survey if you can actually take up your phone uh scan up the the QR code and let us know right um have you looked into buying insurance if you are in the crypto industry yes no but you know you're not quite sure what the insurance product is available but you would like to have it to uh explore for anybody actually stop by the world booth and pick up a gift so let me just talk a little bit about wine Infinity so one Infinity is the product line launched by one degree and one degree is a licensing insurance company in Hong Kong we started operating the business about two years ago and today we are the only insurance company in Asia Pacific very much specifically focused on the crypto industry and we provide insurance coverage and policy throughout the value chain of crypto so therefore we are the only one actually partnered with a muniri which is the largest reinsurance company in the world and also in the past six months after we launched this product we have now working with some of the very important infrastructure providers in the industry such as you know China Amber we also with work with various of what is solution providers so therefore um exactly what is insurance for the crypto industry and why do people buy insurance or why do they not buy insurance this is a very good question especially very relevant this week given what happened uh with FTX when FTS first happened um I just landed in in London and uh I was thinking I need a joke I need a joke to actually start my uh my my presentation and then I went to the speaker's dinner someone came to me and said can you tell me did the ffti is actually buy insurance and I thought Ah that's not a joke but it's a very good question I hope they did because now they really knew some dno the directions and officers protection if they haven't that's a lesson learned actually so therefore when we talk about the risk by the insurance professionals we talk really about you know three levels of insurance or risk we talk about the inherent risk which is if you actually operate in your space you provide services to your customers you are running your daily operations you are facing certain risks and that is the risk you have to manage that's what we call the inherent risk so how do you do the inherent risk you can control your risk you can well we call you can migrate the risk or you can decide that you want to avoid the risk but there are certain risks no matter how good you do you cannot avoid it 100 and that is the risk what we call the residual risk and that is the risk that you want to transfer to another Capital provider which is the insurance company so what we always say or refer to as residual risk is called the risk mitigation and the risk transfer and that's the solution the one Infinity provided to the crypto industry now who are buying insurance and why they're buying insurance what we have seen in our past year of operation We have dealt with hundreds of inquiries from all over the world people are buying Insurance because this is increasingly becoming part of their corporate governance people wanted to um should demonstrate to the regulators and also to the investors and to their board but more importantly to their customers that they're insufficient you know control of risk another control of risk is endorsed by an insurance company who is underwriting the risk and who is putting the risk on their own balance sheet there's nothing more you know powerful than that sort of endorsement you can actually go to uh on an auditor and they will give you a report but that report is for the super sacrific points but insurance companies they are willing to share that risk they are putting their own Capital against that risk so there's nothing more significant than that that sort of uh endorsement you can demonstrate but but also it is actually incentives to the board and Senior Management because waste that protection they know that they are protected should they go anything actually goes wrong and they can actually you know use the resources the payment from the insurance companies to protect the company but also to protect themselves personally so finally this is a very important risk transfer and protects the company as a bottom line so you may have a top line that you want to achieve but if something goes wrong all you care about is actually you still have the bottom line that is protected but we have also very interestingly seen that insurance has increasingly becoming a marketing tool um were actually the brand building it demonstrated to the assurance and the sustainability today if you go to any of the large exchanges via the binance be the crypto.com you will see on the about us a big press release about the insurance limits that they purchase why do they do that because in an environment like or for the very clear regulatory control when customers they think about their own assets and the security of the assets what they want to see is actually you are protected if there's a hacking if there's internal fraud if there's anything goes wrong with your system if you fit you'll fail to deliver the service you promised there's the insurance that can actually protect your customers and their interests so it's very important that people wanted to demonstrate the care and they protect their customers and that's why insurance has been actually used as a brand building but then finally it is actually a value proposition we have increasingly seen after a lot of the companies that have bought their own insurance but the limit compared to the total value of assets under management is very tiny what do they do the customer will say well if something happens right this is more of a zero or catastrophe sort of uh scenario and for the limit is that you provide you know it's nothing I may or may not get anything then a lot of these you know exchanges custodians they will come to us and they say can you actually protect our customers can you provide you know insurance policies as a Top-Up for them yes of course we can so therefore insurance has now been interviewed as a value-added option for the customers and also the third party due diligence as we said oftentimes you go out you have the auditor's report you also have the stock 2 report but more importantly as you can say we have insurance somebody is willing to actually put their own money down their own Capital down against our credibility so that is a very powerful value proposition for their customers so in essence you know what insurance is actually used for risk transfer trust and sustainability and we do want to actually get that message across however it is not that that easy to buy insurance if you have ever actually tried to talk to an insurance company or a broker you say Hey you know I'm in the crypto industry I mean the Webster industry I mean a technology industry any of these keywords you know it is red flag right there with your insurance company or broker and especially if you say you mentioned the word crypto very likely you will say no no no no no you know we don't do that you know you need to actually find another solution so that's why we are the only company that our entire team we do not do any other Commercial Insurance the only product that we offer is for the insurance it is for the crypto industry so why is it why is it that the insurance company you enter you know it is a huge industry actually if you look at the entire city of London it is filled with insurance range insurance and the insurance broker companies why can't I actually place your risk the reason is because it's lack of historical data to start with we all know insurance is about law of large numbers when people have data let's say if you want to buy a car insurance you want to buy health insurance you have hundreds of millions of data that you can mine you can you know the frequency you know the severity you know the upside you know the downside then you can transfer the risk so it's very easy for an underwriter to mine the data but when it comes to crypto industry the first policy was issued probably about five years ago and today there's no loss in the industry there's you know a lot of incidents that happen a lot of Damages a lot of laws happen but there's no insurance claims that happen specifically so for underwriter to work with this Underwriters scratching his head and thinking how can I press this risk right and also this is a risk that is built on the new technology we always say crypto and people actually read negative news every day my husband actually told me when I first told him I said I'm going to do Crimson Insurance my husband said I'm not sure it's a good idea and he's reading financial times and he says there's no no one day that passed with all the negative coverage on the financial times about the crypto industry are you you're not going to make money so that's just the people do not understand what is the technology and with that technology implemented in the business process what is the vulnerability and what is the risk so therefore they are unable to price that risk either they are unable to manage that risk as well so finally is the digital space is very different in terms of the value chain we started with a chain then we started with layer one layer two now we're talking about cross chain we're talking about how different business process the essence of our technology is we are going to either incrementally change the building process or we're going to challenge the current process and say hey there's a better way and we're are going to make you obsolete so the underwriters they do not understand they have never seen this well at work well it not work right and so they are now unable to actually to to judge in this entire value chain exactly what you do so for example we have been talking to some reinsurers about slashing insurance we need to start from what is a validator what is slashing and when is slashing happens what is the root cause of slashing and you have to actually start from crypto 101 to educate the entire insurance industry in order to get a point people say I have no idea what you're just talking for about 40 minutes so maybe we can have a second you know meeting right so therefore you need somebody who is crypto native who understands what you are looking for who understands what your plan point is and in order to provide you with a solution and that's exactly what we do so we actually provide to Simply put it two uh products we the first item easily understand product is actually we do the wallet coverage be it the code wallet you use HSM you use um MPC wallet where you use any of the other technology to build your own wallet that is the wallet that we cover so we cover cold water warm wallet and hot wallet so for the cold wallet the most important thing that we cover is internal fraud something that happens with the organization and cause the loss of the assets that you held in the cold water for your clients and that's what we cover but that's not the only source of the risk or the only point of failure there's a hacking hacking to your warm wallet hacking to your hot wallet and that's the solution we provide there is a crime insurance so it includes both internal crime and external crime now just from you know the definition of these Insurance coverages you can see that special insurance is much cheaper because the car bridge is actually much much narrower but the crime is much broader so therefore it's more expensive when an insurance company actually looks like like this they need to understand what is called what it was a whole wallet from our perspective we actually think the temperature of the wallet is important but it's not very relevant to our pricing what we really look at is actually the internal control and the risk management associated with the entire deposit and withdrawal process so that's why it's very important the underwriter needs to understand the ecosystem and how the technology Works in order to price the risk so the second part of the product we offer is called corporate liability cover and this is the cover I said ftn I hope they bought the cover and if they have now finally the insurance industry has one claim point right now um what this covers is a protests against the uh it protects all your directors and all the senior officers actually running your business should there be any um litigation regulatory inquiry investigation against your you know your directors and officers the legal costs or the and or the damages arising from such things is covered so that is the directors in the traditional Finance World a lot of people actually know these days coming into our space from a very traditional financial institution and you know this is a must I have for anyone to operate in today's world um the other one is actually the professional Indemnity that actually has a broader sort of um you know application it involves the service providers so long as you are a service provider and you provide you you make a promise to your clients and you actually make a make of you make a profit from delivering on that that promise then there is a probability that you may actually fail in delivering your promise when that happens you're you're if you do not actually address that and the remedy that then would it cause the damage to your reputation so this this is when the insurance will come in and say Don't Panic for any damage to your clients any loss to your clients the insurance actually will cover it if the clients have to choose you and the client says look you know I would like to I'm not very happy about situation then all the legal courses also actually covered this is very important to cover actually especially for the crypto industry given the nature and the fast moving but we are still a new technology it's particularly very important to get discovered so therefore um I've said a lot of the you know reasons now you understand when you're knocked on the door of the insurance company or a broker why you are not actually getting the cover so why we can actually do the cover it's very important is to say that this is a you know multi-disciplinary underwriting approach so we have a team every team member to become a part of our team you have to demonstrate to us that you actually understand crypto it was not very good that last in November we asked everyone to invest in crypto to show us right so our actuary who was very smart invested in one US Dollars and she said look now I see how it works right now looking back I understand why actuaries are actuaries um but I just wanted to say that when you come to our team feel free to stop by our booth again everybody understands and we'll be more than happy to discuss you know your needs um we also have a sister company which acceptance security company again compared to traditional cyber security companies our focus and our own space in servicing the web 3 community so we're specifically looking at the vulnerabilities and the entire you know process now before my time actually runs any further I just want to say that what we are looking at we're looking at obviously your control environment we're looking at your design we also look at the hardware software and the financial strengths and finally we carefully examine your obligations with your customers we are in there to give you a device to say are you over promising maybe this is out of their step and that advice is all free because by the end of the day we are with you we are your Advocates and we are the person and we are the people that we everything anything goes wrong we are going to make the claim and make you survive um our original appetite obviously I said we actually we like cold wallets we have a very uh you know large appetite um for the cold wallet but we are writing the whole Wallets on a case-by-case basis uh we like the reputable regulated companies um obviously when you come to us please make sure you don't have Financial crime history and also you know for pi dno we very particularly important that you have the financial strength to make sure that you are um your directors and officers are not trying too hard um so finally uh actually I wanted to say come to our booth but if not you know take a picture of our QR code we'll be more than happy to talk to any of you and we are here to answer your questions as well thank you