DeFi insurance claims paid out a total of $34.4 million in 2022, a new report using industry data shows.

Last year was a pivotal year for decentralized finance (DeFi), especially in the insurance industry, with a new report revealing that $34.4 million was paid out in DeFi insurance claims.

Overall, the industry’s on-chain DeFi insurance providers sold 19,839 policies, 552 claims, and 379 payouts in 2022, according to a March 20 OpenCover report.

Over the past nine months, the organization tracked 3,434 cover purchases, with 80 new claims and 234 payouts, following increased demand following major crypto events like the FTX crash.

According to the report, the main attack vectors included protocol logic and infrastructure, accounting for 78% of the losses.

However, this amount is minuscule compared to the estimated $3.8 billion lost in various exploits and hacks last year. Still, the new data suggests that DeFi insurance may be a trend worth watching.

DeFi Insurance

Despite a notable rise in demand for DeFi insurance, only 151,000 ETH ($231 million) worth of active risk coverage was covered, the report said, representing just 0.5% of DeFi’s $48 billion total value locked (TVL).

Additionally, the report noted that the value of potential claims in U.S. dollars and Ether fell by 44% and 58% respectively over the past nine months, despite the fact that cryptocurrencies and DeFi have occurred more frequently and incurred greater financial losses, relatively speaking.

Ensuring a bigger attack

The report found that targeted attacks appear to be on the rise across the cryptocurrency space, as the DeFi insurance industry paid out a record $34.4 million in claims in 2022, led by claims stemming from the TerraUSD (UST) and FTX debacles.

Insurance can protect users from risks they cannot control, with coverage for losses resulting from hacking and other breaches, the report said.

The report’s data, which can be viewed in full here, is based on a coalition of industry DeFi insurance providers, including Nexus Mutual, Unslashed Finance, InsurAce, Chainproof, Sherlock, Neptune Mutual, Risk Harbor, InsureDAO, and Ease.