Lockton launches new digital asset custody insurance facility

October 13, 2022 - Developed by Lockton's Emerging Asset Protection (LEAP) team in collaboration with custody insurers, the facility is supported by Lloyd's syndicates, together with insurance companies.

This aims to provide Lockton clients with policy wording and full access to London market capacity, estimated today to be in excess of $850 million for custody coverage.

Lockton's new facility includes:

• Access to full market capacity for custody coverage, without the need for third-party surveys. • The ability to secure bespoke programs, incorporating various limits and cost structures, designed to work alongside an insured's existing and future risk management planning as it onboards custody of digital assets. • Custody insurance underwriting process, managed by Lockton's experienced LEAP team members.

Traditionally available through the London market, custody insurance (sometimes called "cold storage" coverage) provides indemnity in relation to private keys stored in secure locations, including those that are part of a multiparty computation (MPC) solution or entirely "offline."

In addition to providing coverage for the loss of assets, custody insurance plays a sizable role in risk mitigation by adding an extra layer of protection beyond technical and physical security for companies involved in the care, custody and control of digital assets or those providing technology to support custody solutions.

"Custody insurance plays a vital role in protecting consumer assets stored by third-party custodians and is an essential tool in the successful operation of many digital asset companies. Historically, securing that coverage has been difficult, often requiring complicated underwriting processes and the involvement of third-party surveys," said Neil Daly, head of Lockton UK's LEAP team. "Our new custody insurance facility makes it easier for companies operating in the digital asset ecosystem to build robust custody insurance programs, enabling them to better protect valuable digital assets and effectively serve their customers," he said.

"This facility represents a step forward in insurance coverage for businesses in the digital asset custody space," said Sarah Downey, head of Lockton's global LEAP team. "Our LEAP team's deep partnerships with both insurers and clients and our continued investment in and focus on innovation in this space, further exemplifies Lockton's long-term commitment to helping the digital asset ecosystem continue to grow."