kaal:claim:3396542-031

In the proposed design, bad business decisions by one underwriter need not impact other underwriters or the DAO, because losses from underestimating the insured risk fall purely on that underwriter so long as the staked tokens cover the claim.

Source quote, verbatim
If a certain underwriter makes the mistake of underestimating the risk of the insured event, the losses will be suffered purely by the underwriter as long as the value of the staked or encumbered tokens covers the claim.
From

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019), VI. Conclusion, p. 24
https://ssrn.com/abstract=3396542 · source PDF

Cite as

Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542

Holds when
Classification

mechanismsupport: arguedrisk-and-incentivessystemic-riskdao

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Attestation record: colloquium/attestations/5a645998a643d4d6...json
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