Underwriting

I. Function

Underwriting plays a central role in insurance and so it is in our platform. It represents the willingness to accept the risk with the current rate of return (premium), and therefore in our model influencing the supply-side of insurance products.

Our approach for Main-net launch bases its functionality on incentivising Underwriters with part of the premiums paid from policy buyers associated to the products one has decided to obtain exposure to; in other words staking NSURE tokens in exchange for a share of future earnings sourced from premiums, paid in ETH or stable coins.

II. How to underwrite

To start underwriting, make sure you have mined NSURE tokens in your wallet.

Step 1: Deposit the NSURE tokens into the underwriting smart contract, by clicking Deposit. Once the depositing step is done the total Deposit “staking power” will appear under the “Holdings” section.

Note: You will first need to Approve the contract in order to deposit tokens.

Step 2: Identify protocols attractive to your risk/reward appetite & provide coverage capacity as an underwriter. (Tip: Security Rating and the risk assessment map may help you to analyse potential candidates for your underwriting portfolio).

In order to start underwriting, you can set amounts on desired products on the right hand side, available range is from 0 to your Deposit.

After adding staking into your selected projects, click “Confirm” and and execute via signing a transaction with your wallet. The staking power left & leverage used will be calculated. An error message will pop out if you overuse your staking, so you could either lower your staking or diversify it into more projects.

This process is free of fees and will not encounter any transaction cost from your wallet.

The platform will also indicate you the maximum staking power you can utilise on every product (by clicking Max), based on your available balance and correlation.

Step 3: Monitor your portfolio returns and rebalance from the “My Portfolio” section.

You can check your staking provision under “My Portfolio” section, where you can unstake and withdraw (subject to a 14-day lock up period) your NSURE token if you would like to exit the underwriting, or claim your reward (i.e. the premium of policies without claims in the protocols you've underwritten, proportional to your share of the underwriting pool).

Note: see IV. Terms and Conditions for more details.

III. How the leverage is calculated

The leverage granted to each underwriter is not a constant level but based on user's actual portfolio. Leverage could be increased by staking:

  1. more higher rating products

  2. across more less-correlated products

Staking power used is calculated by the formula below -

Where RF(i)*EX(i) is the Leveraged Staking for project i, and Corr(i,j) is the correlation coefficient between project i and j. The leveraged staking is the product of your real staking one project and the leverage factor for this project.

The calculation of staking power consistent with MCR calculation in capital model (Learn more about MCR).

IV. Terms and Conditions

1.Any NSURE tokens deposited and utilised for underwriting will undergo a 14-day cool-down process, when requested to be withdrawn. During this period, Underwriters will still be eligible for premium rewards as well as the potential claim payouts.

Reasoning behind this condition is to prevent any kind of malicious activity in the case of an exploit being spotted in regards to any product, hereby mitigating means to outsmart the system, and preserve fairness.

2. In the event of a successful claim, the same percentage of Nsure tokens staked on a specific product that underwent a payout will be deducted and burned as means to share losses resulted at platform level.