According to CoinDesk, Fordefi, a decentralized finance (DeFi) focused wallet firm, has secured a cyber threat and crime insurance policy from Munich Re, a German insurance carrier. The policy, whose dollar amount remains undisclosed, was facilitated by the Emerging Asset Protection team at Lockton, a blockchain expert insurance broker. The policy covers Fordefi's wallet against cyberattacks, internal fraud, and collusion, but does not extend to protection at the smart contract level.
Fordefi's wallet, which employs multi-party computation (MPC) for key sharing, allows customers to increase their coverage from Munich Re on an individual basis. The DeFi sector, known for its rapid evolution and decentralized, on-chain trading platforms, has been dubbed a 'playground for hackers,' posing a significant challenge for insurers specializing in digital assets.
Fordefi CEO Josh Schwartz stated that the new product has prompted Munich Re to delve deeper into the DeFi sector, with more developments expected in the future. Schwartz, formerly the chief operating officer at Curv, an early crypto custody firm acquired by PayPal in 2021, noted that Munich Re is becoming involved with the most active DeFi players. The insurance policy covers external cyber threats and attacks that could compromise the platform, as well as internal fraud or collusion.
Sarah Downey, the blockchain lead at Lockton's Emerging Asset Protection (LEAP), stated that the insurance industry is making progress in addressing smart contract risks. Chainproof has offered coverage to DeFi users for technical code failures, and the decentralized capital pool approach created by Nexus Mutual has gained popularity.
