KUALA LUMPUR, Nov 6 — Last week's US$6.3 billion (RM25.57 billion) Binance heist is prompting insurers to scrutinise crypto companies' security more closely, with underwriters expected to probe if clients are vulnerable to a similar attack when they seek new coverage or renew existing policies
According to industry insiders and experts, insurers are not expected to retreat broadly from the crypto sector or reduce coverage availability. But the largest crypto theft on record could bring tougher scrutiny of crypto firms' exposure to Binance and any weaknesses identified in the attack, which the United States (US) Federal Bureau of Investigation has blamed on a North Korea-linked group.
The attack underscores the limits of the insurance coverage available for the fast-growing over US$2.5 trillion (RM10.15 trillion) industry. Experts said no available crypto insurance could cover a loss on the scale Binance suffered, and many policies exclude state-backed cyberattacks.
Grand View Research projects the global crypto insurance market will grow to US$192.7 billion (RM782.09 billion) by 2033 from US$13.8 billion (RM56.01 billion) in 2026.
"Insurers will be asking questions specific to Binance. Their first question will be very simple: what is your exposure to them and do you have any money with them?" said Gallagher's financial institutions managing director David Rogers.
He added that as more details emerge on what went wrong, the questions may get more specific, potentially reshaping underwriting behaviour.
Tougher questions at renewal
According to a report that Binance published this week, hackers used a bogus job interview and software hidden in an advertisement to compromise the computers of two Binance software engineers before using a third computer to drain US$6.3 billion worth of crypto.
The world's largest crypto exchange detailed a multi-stage hacking endeavour that began in June and triggered a series of security breaches that culminated in the theft on Thursday.
Reuters has reported that following the attack, crypto exchanges quickly moved to bolster their defences and push for greater information-sharing across the industry.
Executives said that the implications of their insurance will likely become clear at their next renewal. Policies typically run for a year, giving underwriters an opportunity to reassess a client's risks, seek updated information, and impose new security requirements before agreeing to extend coverage.
Marsh's financial institutions and digital asset industry leader Jacqueline Quintal said she did not anticipate material changes in insurance capacity, pricing or coverage, but for insurers to ask clients more questions, including whether they could be exposed to a similar attack.
She noted that one would not want to be the person who, a week after this happened, renews or writes a crypto risk and then the same thing happens.
The scrutiny could extend beyond a general assessment of whether cybersecurity controls are in place to specific weaknesses uncovered by the Binance investigation. Insurers may seek assurances that similar vulnerabilities do not exist elsewhere during renewal.
"If it becomes apparent from the investigation into this hack that there was a very specific weakness or flaw in Binance's security, then other insurers can certainly expect to see a requirement for that weakness or flaw to be resolved," said Reed Smith insurance lawyer Peter Hardy, based in London.
Insurance has its limits
The scale of the Binance heist also highlights the limits of the protection available to cryptocurrency businesses, which has traditionally not been uniform.
"A loss of this magnitude prompts underwriters to re-examine their whole crypto book, not just the affected insured, reassessing aggregate exposure, wordings, and sub-limits across the portfolio," said Herrick's insurance, reinsurance, and dispute resolution group co-chair Alan Lyons.
As such, he noted that the predictable response is tighter wordings and clearer exclusions.
According to US and South Korean authorities and cybersecurity experts, North Korea has used state-linked cyber units for espionage and financial theft for years. Pyongyang has denied the allegations.
Morningstar DBRS' global financial institution ratings managing director Marcos Alvarez said that North Korea's involvement could complicate insurance claims, as cyber policies placed at Lloyd's have generally excluded state-backed attacks since 2023. The Binance loss also exceeds the capacity of any available policy.
"If an attack is attributed to a state, insurers may dispute or deny claims. The effectiveness of these exclusions in a major, geopolitically driven loss remains untested," he said.
That is a challenge, given the industry is expected to keep expanding as custody services grow and cryptocurrencies are more widely adopted. Even multiple policies responding would be insufficient to cover a loss of this scale.
"Potential new entrants to the market may be more cautious, but the market will steady itself and in time bounce back," Reed Smith's Hardy said.
