Risk Assessment

Our decentralized approach to risk assessment also means that we are not beholden to any single underwriter or other centralized authority. Instead, we rely on a collective understanding of risk and the expertise of our board of trustees to make informed decisions about the insurance products offered on our platform. This allows us to provide our customers with the best possible coverage at the most competitive prices.

At the heart of the InSaaS protocol is a commitment to assessing risk in a way that is both thorough and reliable. Unlike many other decentralized insurance players, the InSaaS protocol does not rely on staking power of specific underwriter or dynamic calculation based on capital reserve to evaluate the risks associated with a given insurance product. Instead, the InSaaS protocol uses a tried and true method that has been used in the traditional insurance industry for decades.

The process begins with the identification of risks. This involves carefully analyzing the potential sources of loss for a given insurance pool and determining how likely it is that these losses will actually occur. Once the risks have been identified, the next step is to evaluate the probability of loss for each one. This is done by considering a wide range of factors, including the severity of the potential loss and the likelihood that it will occur.

Once the probability of loss has been determined for each risk, the next step is to estimate the expected claim impact. This involves estimating the total amount of money that will be paid out in claims for a given insurance pool, taking into account the probability of loss for each individual risk. This allows the governance board to determine the overall risk profile of the pool and to set premiums accordingly.

To further mitigate risk, the InSaaS protocol employs a number of additional techniques, including the prevention of risk congestion. One way the governance board does this is by setting a capacity limit for each insurance pool on the protocol. This ensures that the total amount of insurance coverage for a given pool does not exceed a predetermined limit, reducing the likelihood of a catastrophic loss and helping to prevent the pool from becoming overcrowded.

Additionally, the governance board regularly reviews and monitors the risk profile of each pool to ensure that it remains within acceptable limits. This allows the protocol to identify potential issues early on and take steps to address them before they become a problem. By continuously monitoring and managing risk in this way, the protocol are able to provide the users with the peace of mind that comes from knowing that their coverage is reliable and secure.