# kaal:claim:3396542-031

**Claim.** 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.

**Type.** mechanism  **Support.** argued

**Holds when.**

- value of staked or encumbered tokens covers the claim

**Source quote.**

> 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, page 24

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

**Verify.** sha256 of source PDF `ce2bda03a0b788ea3e7747f02c3c351ef7c808a41150d5cda34767bbe98800c0` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Calcaterra%20et%20al.%20-%202019%20-%20Decentralized%20Underwriting.pdf

**Topics.** risk-and-incentives, systemic-risk, dao

**Keywords.** risk-isolation, contagion, collateralization, dao-design

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