Blue Vault is the first insurance solution of its kind to be placed in the specie insurance market
Arch Insurance (UK) Limited, in collaboration with Marsh, the world’s leading insurance broker and risk adviser, today announced the launch of Blue Vault, a new solution to provide insurance protection for the secure storage of digital asset private keys held in traditional vault facilities. Private keys are the alphanumeric data that enable the transaction of digital assets, such as cryptocurrencies, on a blockchain. Blue Vault brings together companies dedicated to providing insurance coverage for digital asset risks. Legal and technical consulting support for Blue Vault was provided by global law firm Norton Rose Fulbright.
Blue Vault is the first insurance solution of its kind to be placed in the specie insurance market. Blue Vault is backed by syndicates Arch 2012 and Canopius 4444, as well as other syndicates and underwriters at Lloyd’s of London. Available globally, Blue Vault provides limits of up to US$150 million and covers the loss of digital assets due to internal and external theft, including employee collusion, and the physical damage or destruction of private keys.
James Croome, Arch’s Vice President of Fine Art and Specie, stated: “When it comes to the critical risk around the generation and storage of digital assets, it is not just the way sensitive material is stored, but a complete and detailed understanding of the entire life cycle of the private keys. A breach at any stage could cause a financial loss for our clients, so it is the secure generation, transfer and storage of knowledge, not simply the possession of data, that is our paramount underwriting consideration. The importance of this distinction cannot be overestimated and our insurance policy wording was very deliberately constructed to manage this risk.”
With Blue Vault, custodians of digital assets can access a solution which enables them to transfer digital asset storage risks through the life cycle of private key management and storage. “This is a significant step forward in digital asset insurance,” said Ankur Kacker, Vice President and Specie expert on Marsh’s Digital Asset Risk Transfer (DART) team. “The secure storage of digital assets will continue to evolve as the regulatory landscape for this new asset class becomes clearer and financial institutions increasingly expect insurance to cover digital asset exposures.”
Marsh’s collaboration with Arch on the development of Blue Vault marks the firm’s latest client innovation in the digital space and follows the launches of the Proof of Insurance blockchain platform and Bluestream digital broker platform, and the creation of Marsh Digital Labs.
Nicholas Berry, the corporate insurance partner who led the Norton Rose Fulbright team, said: “Obtaining a copy of a private cryptographic key is usually just as valuable as owning the original. Some custodians of keys for cryptocurrency accounts hold the equivalent of hundreds of millions of dollars in cryptocurrency. There are subsequently inherent challenges for systems that create, store, back up, retrieve and destroy these keys securely. Our technology consulting team, led by Professor McBurney, played a vital role alongside our lawyers in assisting with the design of the complex policy wording for Blue Vault.”
Philip Turner, Head of Specie at Canopius, commented: “In the ever-evolving world of crypto, possession of the private key is as good as having the key to a physical vault and thus full access to all of its contents. Blue Vault offers an insurance solution for the safekeeping of the private key but only after a stringent and comprehensive underwriting process is completed. No two risks are the same, so every submission is thoroughly scrutinised before we proceed.”
Source: Company Press Release