25-02-2025
UAE companies launch insurance for crypto firms; say they are 'learning' from Bybit's $1.5-billion hack
Two insurance companies in the UAE have partnered to launch a range of insurance products for companies operating in new markets like digital assets, blockchain, AI, biotech, and the space economy.
Liva Group and Relm Insurance MENA will offer several specialised products to startups as well as established players, protecting them against risks.
'We are focusing on providing access to insurance products that these companies need, to grow their business and to stay protected,' said Joseph Ziolkowski, CEO and Founder of Relm Insurance, speaking at a media roundtable. 'Products like directors' and officers' liability insurance, professional liability insurance and cybercrime insurance are some of foundational insurance coverages that any company is going to need.'
Bybit: A learning experience
He also added that the sophisticated attack on Dubai-based cryptocurrency exchange Bybit, which caused the company to lose approximately Dh5.51 billion has been a 'learning experience' for the entire insurance industry.
'There's going to be a lot of discussion about the cause of the loss, whether insurance is in place, whether insurance will respond to that loss,' he said. 'But these are really important events. It brings additional clarity to the different sources of vulnerability that exist in this economy; awareness related to the effectiveness of coverage that's available in the marketplace; and it comes back to risk management. I think we'll be pulling a lot of thought bubbles and points of insight away from it for weeks to come.'
According to Joseph, the most popular product of the company has been the directors/officer's liability insurance. 'This is a coverage that enables the executives of a company and the board members to protect themselves from personal liability, in their capacity as director or officer of these new and emerging companies,' he said.
Responding to change
According to Martin Ruegg, Group CEO at Liva Group, it is hard for insurance companies to pivot quickly. 'The insurance industry needs hundreds of years of data sets to figure out pricing,' he said. 'This is something we don't have in the case of digital assets.'
He added that many companies in the newer sectors find it difficult to get a good insurance policy. 'I think today if you go to any insurance company, 80 per cent would not issue a policy for certain sectors,' he said. 'They cannot run their business then because they need it from a regulatory perspective.'
Joseph added that he found a huge gap in the market in the UAE when he first started the company here. 'There is a lot of insurance and re-insurance capacity in the UAE but those are geared toward companies doing traditional things,' he said. 'And when you look at the pipeline of companies that are looking to obtain licensure through VARA, they're doing very innovative things like exchanges, payment and remittance platforms, custodians, software developers and hedge funds. So a major gap exists in the local market when it comes to companies operating in the digital asset and Web3 space. And that's exactly the gap we're looking to fill.'
