Background

The traditional global insurance sector represents a massive financial force, valued at over $5.3 trillion in 2021 and projected to grow to approximately $8.3 trillion by 2026, exhibiting a Compound Annual Growth Rate (CAGR) of 9.1%. This enormous scale underscores the critical necessity for risk transfer mechanisms and financial protection across global economic activity.

However, the rapidly expanding realm of Decentralized Finance (DeFi) presents a substantial coverage gap. The DeFi insurance market reached an all-time high (ATH) value of only $1.82 billion in November 2021, accounting for a mere 0.03% of the corresponding traditional global market value for that year.

This discrepancy highlights a massive unmet demand for protection against digital-native risks such as smart contract vulnerabilities, validator slashing in Proof-of-Stake networks, oracle manipulation, and systemic protocol collapses. If only 5% of the traditional global insurance market were to transition into coverable value in DeFi, the market size would reach approximately $265 billion, indicating a vast, unsaturated opportunity.