As global financial institutions deepen their involvement in digital assets, a new wave of insurers are reshaping underwriting and risk strategies, writes Evy Williams.
In the world of insurance, requests for cover from financial services institutions venturing into to digital assets are growing substantially.
Emerging insurance players have been tasked with creating suitable cover to allow traditional capital to move on-chain.
As the insurance market explores new underwriting techniques, capital sources and risk approaches, digital assets cover is moving out of specie and into the mainstream.
Institutional adoption of digitalised finance infrastructure is no longer a distant ship on
the horizon. It’s docked and the world’s largest companies are stepping ashore.
Traditionally a conservative and heavily regulated sector, insurance is becoming one of the most crucial enablers of decentralised finance’s legitimacy.
By covering risks that most legacy carriers won’t touch, smart contract exploits, decentralised governance disputes, and token volatility, forward-thinking brokers are helping to bridge the gap between institutional capital and blockchain innovations.
We have seen this pattern before. Insurance companies have historically acted as an enabler of financial expansion. In the 1600s, insurers underwrote the risks of maritime trade, thus enabling the rise of global empires.
Now, as institutions step cautiously into a new voyage, the decentralised frontier, insurance is once again being called upon to navigate regulatory fog and provide the confidence capital needs to move.
Smart contracts, real risks
With digital assets now becoming more heavily regulated, established capital markets players are building their commercial models for the future. Insurance is one of the pivotal, if overlooked, parts of that infrastructure.
For instance, smart contracts – self-executing programs that automatic blockchain transactions – provide a new basis for insurance products, far from the manual frameworks of the past.
While some institutions hover on the edges of these decentralised systems, the risks involved, from smart contract vulnerabilities to governance breakdowns, remain a tricky barrier to entry. In response to this hurdle, a new breed of insurance provider has begun to emerge.
Hugh Karp, founder of Nexus Mutual, an on-chain insurance alternative, explained to Capital Pioneer how his company is innovating in line with the shift.
“Insurance is fundamentally a social construct, sharing risk so that everyone
becomes stronger,” he says. “Blockchain is all about community, networks, and marketplaces, so it felt like a very natural fit.”
Karp and other innovators in the space are effectively offering underwriting for an industry that traditional carriers either don’t yet understand or actively avoid. However, this isn’t just about plugging a coverage gap.
“We essentially created a discretionary mutual that allows people to share risk with each other. That gave us the flexibility to provide products where traditional insurers are simply not willing to go.”
Joel Pridmore, co-founder and managing director at Frontier Global Underwriting, has a wealth of experience in the insurance space, with a traditional perspective gained through years of working with major brands such as Zurich, Liberty and Munich Re.
“There’s a huge convergence that’s coming, traditional insurance products on-chain, but also alternative capital funding new types of risk pools. It’s not about replacing the old; it’s about expanding the possible,” Pridmore says.
This is not the first time that insurance has played a pioneering role in fundamental financial change. In fact, it was how it was born.
Just as Lloyd’s of London enabled merchants to sail into uncertain waters centuries ago, today’s new digital underwriters are helping institutions step into smart contract ecosystems with their eyes open, and their risks covered.
On Chain, In Practice
As institutional interest in digital assets grows, so too does the demand for insurance solutions that speak the language of both crypto natives and traditional finance.
Meeting this need requires more than clever coverage, it demands new infrastructure entirely. Enter Native, a brokerage firm purpose-built to operate across both sides of that convergence.
“We’re the only broker able to navigate both on-chain and traditional markets and piece together a risk transfer programme that reflects the nuance of DeFi risk,” claims Ben Davis, CEO of Native.
Rather than rely solely on traditional reinsurance capital, Native has developed a hybrid model that combines regulated carriers with blockchain-native capacity.
The result is a dual-structured offering that can address novel digital risks, from staking and custody to smart contract exploits.
“We create our own products that cover grey areas often overlooked in existing policies,” Davis says. “We’re building more capacity in the market to make premiums more palatable for the industry.”
Part of that capacity comes through a syndicate built on Nexus Mutual, which functions like a blockchain-based Lloyd’s of London. It enables fast, capital-efficient underwriting of risks that traditional markets often hesitate to touch.
“So far, insurance carriers have been dipping their toes in. If they can get a good rate, they’ll do it.”
“But the digital asset community has had to bear the brunt of that. We’re trying to create a market structure where people agree on standardised terms across coverages and charge rates that are more aligned with actual exposure,” Davis says.
For Dan Ross, Native’s chief technology officer, the real innovation lies in combining this capital with precision underwriting.
“We’re stringing together different pools of capital and uniting them under what we believe are best-in-market wordings,” says Ross. “That de-risks the position for insurers and increases confidence.”
While the front end may resemble traditional broking, Native’s architecture is designed to evolve with digital markets rather than play catch-up.
“It’s about empowering capital on both sides, institutional and on-chain, to interact with trust, structure, and scale,” Ross adds.
In an industry long defined by silos, this bridging model may be what finally invites institutional capital to engage with confidence.
The market signal
If modernisation is driving the technical side of the digital insurance market, the second force shaping its future is the slow, yet deliberate, movement of traditional carriers towards participation.
Pridmore has seen this pattern before. Through a diverse career, he’s well-acquainted with the natural caution of global insurers.
“Insurers are naturally cautious, they don’t want to get in too early, but they definitely don’t want to be left behind,” Pridmore says.
“The challenge is that they need to be confident the products are sound, the wordings are robust, and the capital is there to support it. Without that, they just won’t commit.”
According to him, the balance between caution and fear of acting late is now playing out in real time.
“A lot of the larger carriers are watching closely. They might start with very small lines, dipping a toe in, often through partnerships with specialist brokers, so they can understand the exposures before they really lean in.”
That shift is already visible in the way established firms are testing the waters.
Beazley’s CryptoGuard offers targeted directors and officers (D&O) protection for senior executives in crypto firms; Howden has joined forces with Lawrence Stephens to merge theft insurance with specialist legal asset recovery; and Marsh, in partnership with Relm Insurance, is positioning to capitalise on the accelerating adoption of digital assets.
Pridmore sees these as early signs of a much larger move. “You’ve got to remember, when traditional insurers come in, they come in with scale,” he says. “Once they’ve got the data, the partners, and the confidence, they can roll out these products globally, and very quickly.”
The moment, he suggests, may not be far off. “What we’re seeing now is the groundwork. Products are being formed, partnerships are being tested. When the market tips, when the risk and the pricing line up, they’ll be ready to move in a big way.”
And when that happens, insurance won’t just be following DeFi’s expansion, it will be one of the primary forces propelling it forward.
Insuring institutional entry
Insurance is proving to be more than a safety net for convergence; it’s becoming a key enabler for institutions stepping into decentralised finance.
Pridmore at Frontier Global Underwriting explains the emerging insurance space’s potential and the role insurers play: “We are committed to this sector. We think it has enormous potential. Our aim was to be an enabler and a true partner in assisting reputable businesses doing things for the right reasons.”
However, it’s not just about offering coverage, it’s about providing meaningful, tailored protection that addresses the unique risks of digital assets, while still covering those that are traditional.
“Clients say they can get them cover, but there will be things like cryptocurrency exclusions in there which make the cover unfit for purpose and cheapens it.”
Pridmore stresses how some insurers’ generic policies fail to meet the mark as institutional finance filters into the space Insurance is becoming part of a broader compliance ecosystem that has the potential to attract better investors and raise standards.
“Compliance, of which insurance is a part, is value accretive.”
“The ones that are going above and beyond are those who are attracting the better investors and the partners.”
Another dynamic barrier is regulatory clarity. While maintaining jurisdiction-wide standards is challenging, it is also essential.
“The Trump administration has had a massive impact… There are positives from a regulatory perspective, but it doesn’t mean it is risk free,” Pridmore says.
For the on-chain side, Karp at Nexus Mutual views insurance as a natural extension of blockchain’s community ethos.
Karp’s mutual model addresses gaps left by traditional insurers, attracting growing interest from both crypto natives and established funds.
“We’re now getting a lot more inquiries from new funds, especially existing funds that have a digital asset team… interest has increased significantly.”
More specifically, he points to tokenisation as a catalyst for insurance innovation and
capital efficiency.
“Crypto markets are excellent at coordinating capital… Thanks to tokenisation and global reach, crypto markets can do this much more efficiently.”
Together, these voices underscore how insurance is evolving from a reluctant follower into a cornerstone of institutional confidence, creating the risk frameworks institutions need to engage fully and securely with the decentralised future.
Recent milestones in digital assets
October 2024 – AXA Invests in Crypto Risk Analytics Platform
AXA made a strategic investment in a UK-based crypto risk analytics firm to enhance underwriting precision for digital asset exposures.
November 2024 – Lloyd’s Syndicates Trial On-Chain Policy Issuance
Select Lloyd’s syndicates began testing blockchain-based issuance and claims processing for digital asset policies, aiming to reduce friction and fraud.
December 2024 – Marsh Brokers $1B Digital Asset Cover for OSL
Marsh facilitated a record-setting $1bn insurance placement for OSL Digital in Hong Kong, covering custody and trading infrastructure.
January 2025 – Aon Pilots Parametric Cover for Stablecoins
Aon launched a pilot parametric insurance product to protect stablecoin issuers against depegging events, using blockchain-based triggers.
February 2025 – Beazley Explores Smart Contract Liability Cover
Beazley began underwriting exploratory policies for smart contract failures, targeting DeFi platforms and blockchain developers with bespoke tech E&O solutions.
March 2025 – Superscript Expands Crypto Broking Team
London-based broker Superscript added senior hires from the crypto sector, claiming the largest dedicated digital asset insurance team in the UK.
April 2025 – WTW Launches Fintech & Digital Assets Taskforce
Willis Towers Watson formed a dedicated taskforce to support clients navigating complex digital asset ecosystems, offering tailored risk transfer and consulting services.
3 March 2025 – Qubit Approved as Coverholder by Canopius
Specialist MGA Qubit, focused on digital asset risks, was approved as a Lloyd’s Coverholder by Canopius, enabling bespoke cover for crypto-native firms.
14 May 2025 – Canopius Partners with EX.IO
Canopius announced a strategic partnership with Hong Kong-based virtual asset platform EX.IO, expanding its underwriting footprint in Asia’s regulated crypto markets.
24 July 2025 – Mosaic Launches Cyber/FI Cover for Digital Assets
Mosaic Insurance unveiled a modular cyber and financial institutions crime product tailored to digital asset firms, offering Lloyd’s-backed capacity and partnering with specialist broker Native to reward strong risk postures.
