A new report published using industry data shows that DeFi insurance claims paid out a total of $34.4 million in 2022.
Last year was pivotal for decentralized finance (DeFi), particularly in the insurance sector, where a new report suggests that $34.4 million was given out in DeFi insurance claims.
Overall, the industry in 2022 saw on-chain DeFi insurance providers sell 19,839 policies, with 552 claims and 379 payouts to date, according to data published on March 20 via OpenCover, an organization that works with a variety of DeFi insurance providers to produce the report.
In the last nine months, the organization tracked 3,434 cover purchases, with 80 new claims and 234 payouts, following increased demand after notable events in crypto, such as the FTX collapse.
According to the report, the leading attack vectors include protocol logic and infrastructure, which accounted for 78% of losses.
However, this amount is a pittance compared to the estimated $3.8 billion lost in various exploits and hacks from last year. Still, new data suggests that DeFi insurance may a trend worth watching.
Despite the marked uptick in demand for DeFi insurance, only 151,000 ether ($231 million) worth of active risk cover was underwritten, constituting just 0.5% of the $48 billion total value locked (TVL) in DeFi, the report said.
Additionally, the report also stated that the value of potential claims decreased by 44% and 58% in USD and ETH terms, respectively, over the past nine months, a decrease in claim size despite the fact that in relative terms, scams across crypto and DeFi have been occurring with greater frequency and more financial damage.
Insuring larger exploits
With the DeFi insurance industry paying out a record $34.4 million in claims in 2022, led by claims stemming from the TerraUSD (UST) and FTX collapse, it appears targeted attacks are seeing an uptick all over crypto, the report found.
Insurance can protect users from risks beyond their control, the report claimed, with coverage providing cover losses due to hacks and other vulnerabilities.
The report’s data, available in full here, was based on a consortium of industry DeFi insurance providers, including Nexus Mutual, Unslashed Finance, InsurAce, Chainproof, Sherlock, Neptune Mutual, Risk Harbor, InsureDAO and Ease.