The Boston-based company, which currently employs 10 people, raised about $2.5 million in its first initial formal round in 2021, and about $500,000 in seed money before that.
While the company launched as a managing general agent in the US in 2019, Aejaz said the company is progressing toward obtaining its insurer license in Bermuda. That process should be completed “hopefully, in the next couple of months,” he said.
Plans call for the company to maintain its MGA structure for various products, but also act as a specialty insurer as it expands its offerings and presence. Breach has initially focused on retail insurance but it will also be in the commercial space as it expands Aejaz said.
First big product
Breach launched its first big product in February. Dubbed Crypto Shield, it is a retail insurance crypto investor product that covers the theft of crypto while in the custody of qualified exchanges. The product is available for more than 20 cryptocurrencies to consumers using Binance.US, Coinbase, CoinList and Gemini.
The company partnered with Boost Insurance for its first program, a company that Aejaz said acts as its product roadmap, providing backend technology between its connectivity to the reinsurance panel. Trisura Guarantee Insurance Company is the fronting carrier for that program. Crypto Shield is initially available in California, Illinois, Massachusetts, Michigan, New York, New Jersey, Nevada, Pennsylvania, Texas and Washington.
Crypto Shield is designed to provide up to $1 million in coverage for theft of crypto while in the custody of qualified exchanges.
The insurtech connection comes through Breach’s platform, which is designed to give policyholders a fully digital experience so consumers can easily purchase policies, make changes and submit claims.
Such coverage is increasingly necessary, Aejaz explained.
“These exchanges have qualified custodians … that are susceptible to potential cyberattacks,” Aejaz said. “There is crypto that’s in hot storage that would be insured through us and there is also crypto that’s in cold storage that could be exposed, too. [There’s also] social engineering, where a messaging system or an email system can be hacked, directing users of that exchange to redirect their assets to an unknown wallet, rendering it inaccessible or lost forever.”
Breach’s platform includes an integrated live pricing service, so that customers get a quote based on the real time value of Bitcoin or whatever cryptocurrency they wish to insure. The process is also intended to be entirely digital.
“You’re doing the entire user experience through our platform without leaving … or printing anything, and then we manage the Department of Insurance compliance … and reporting requirements in the background, making the lives of our retail customers a lot [simpler],” Aejaz said.
The platform is also cloud hosted and custom built by its developers. It relies on a rules-based process to handle information.
“It’s tailor-made for this insurance,” Aejaz said. “We continue to make tweaks on it… to really get it right.”
The emphasis is on the user experience, with lots of backend APIs as well, that will enable future product expansion efforts.
Cryptocurrency has been controversial, but at the same time it has also become more prevalent in the financial industry, with some in the mortgage industry, for example, developing ways to use the digital currency to pay for homes.
It has also become more prevalent in insurance.
Munich Re formed a partnership in 2019 with Curv, a company that offers a secure digital wallet service. That partnership enabled Munich Re to cover up to $50 million of digital assets for Curv customers, in the event of an external cyber breach of malicious behavior affecting Curv or one of its employees.
In 2020, experts from Marsh’s Digital Asset Risk Transfer (DART) team viewed the cryptocurrency insurance market as “hesitant” but hopeful.
Meanwhile, cryptocurrency has recently seen a selloff and plunge in value, while crypto lender Celsius has temporarily frozen all account withdrawals in order to stabilize liquidity in the face of extreme market conditions, The Wall Street Journal reported.
Regardless of risk and instabilities, the market is here to stay and needs insurance cover, Aejaz said.
“It’s something that exists … there’s a subset of the public, whether in the US or abroad, that would like to own it,” Aejaz said. “There’s [also] a real likelihood of some kind of theft or loss, thereby needing insurance, and that’s really what we focus on.”