- Policy durations are measured by weeks. All weeks are time-stamped - start and end on specific days in the calendar year, the pool's creation time-stamp being the origin. The minimum duration a user may buy Coverage for is 1 week, and the maximum period is 52 weeks.
- In practice, the user can purchase a policy with an actual duration of less than 1 full calendar week if the purchase was made in the middle or at the end of the timed week.
- The Premium is determined by the duration of Coverage, the amount, and the current Utilization Ratio of the Project X Coverage Pool.
- There minimum yearly cost of Premium is 1.8%.
- The Premium cost displayed on the app is estimated. Its true value will be determined by how close the policy amount brings the Project X Coverage Pool's Utilization Ratio to 100%.
- 20% of Premium goes to the Reinsurance Pool, while the 80% is redistributed to the coverage providers as yield.
Based on the Utilization Ratio.
Three factors determine the price of cover. As each of the goes up, the price of the coverage (Premium) also goes up:
- The utilization ratio of the pool (the ratio between cover bought and cover provided, pools with a higher utilization ratio are considered riskier and thus more expensive to purchase cover from)
- The duration of the cover which you want to buy
- The amount of cover which you want to buy
The duration may be between a minimum of 1 week and a maximum of 52 weeks. This may be altered in later versions or may differ between different types of coverage products.
The actual duration of the cover is calculated in 1-week intervals, which start and end on specific days. In practice, a user can purchase a policy with a duration of less than one whole calendar week if the purchase was made in the middle or at the end of the time-stamped week.
If they are from different pools - yes! However, you can only have 1 active cover per pool.
P_min - Minimum Premium (expressed in %) TP_max - Maximum Premium at the UR_risky threshold (expressed in %) UR_risky - Utilization Ratio for pricing model when the asset is considered risky (expressed in %) P_max - Maximum Premium when the utilization ratio equals 100% (expressed in %) UR - Utilization ratio (expressed in %) %P - % Premium in regards to the size of the Cover %P_final - final, % Premium in regards to the size of the Cover
P_min = 1.8% TP_max = 10% UR_risky = 85% P_max = 30%