Crypto and DeFi Wallet Firm Fordefi Gets Cover from Insurance Giant Munich Re

As a researcher with experience in the blockchain and insurance industries, I find Fordefi’s announcement of securing crime and cyber threat insurance cover from Munich Re to be an exciting development. Decentralized finance (DeFi) is a rapidly evolving landscape that presents unique risks, making it essential for companies in this space to have adequate insurance coverage.

As a cryptocurrency wallet specialist, I’m excited to share that Fordefi, the decentralized finance (DeFi) wallet I work with, recently announced a collaboration with Munich Re, a renowned German insurance company. We made this announcement through a blog post published on Thursday.

Lockton, an insurance broker based in Kansas City, helps facilitate Fordefi’s wallet policy. This coverage includes protection against cyberattacks and internal issues such as fraud and collusion, rather than securing smart contracts directly.

The specific dollar value of Fordefi’s coverage wasn’t revealed, but customers have the flexibility to increase their protection provided by Munich Re for their wallet, which employs advanced key sharing technology called multi-party computation (MPC).

The rapidly evolving landscape of Decentralized Finance (DeFi) and its network of decentralized, on-chain trading platforms is often referred to as a “hacker’s paradise,” posing significant challenges even for the most experienced insurance providers specializing in digital assets.

As a financial analyst, I’ve noticed that the introduction of Fordefi’s new product has sparked greater interest from Munich Re in the Decentralized Finance (DeFi) sector. This development is particularly intriguing given Schwartz’s past role as COO at Curv, an early crypto custody firm collaborating with Munich Re prior to its acquisition by PayPal in 2021.

Schwartz explained in an interview that the company’s policy safeguards against both external cyber risks and internal fraud or collusion among employees, threatening the platform. Munich Re, however, doesn’t engage directly with smart contracts but collaborates with key players in Decentralized Finance (DeFi), focusing initially on securing private keys and wallet components.

Regarding risks associated with smart contracts on the blockchain, Sarah Downey, who leads the blockchain team at Lockton’s Emerging Asset Protection (LEAP), stated that the insurance industry is making progress in this area. Currently, companies like Chainproof provide coverage for DeFi users against coding errors. Additionally, Nexus Mutual’s decentralized capital pool approach is gaining popularity as an alternative solution.