PANews reported on December 19 that according to Reuters, several market participants said that insurance companies refused or restricted insurance to customers who were exposed to the bankrupt crypto exchange FTX, leaving digital currency traders and exchanges unable to insure any losses from hacking, theft or lawsuits.
Among them, experts from Lloyd's of London (SOLYD.UL) and the Bermuda insurance market asked crypto companies to increase transparency on their exposure to FTX. Kyle Nichols, president of broker Hugh Wood Canada Ltd, said that insurance companies asked customers to fill out a questionnaire asking whether they had invested in FTX or had assets on the exchange.
Insurers have also proposed policy exclusions that would deny coverage for any claims arising from FTX’s collapse, covering digital asset protection and the personal liability of directors and officers of companies that trade cryptocurrencies. Insurers and brokers said the exclusions could be a failsafe for insurers and would make it more difficult for companies seeking coverage.