The UnoRe Risk Model
Traditional risk management models are outdated, and solely built for large and centralized conglomerates. As such, they do not fit the needs of an agile platform like UnoRe. Therefore, we created a new model, tailored to the needs of a 21st century decentralized reinsurer. For any reinsurance model to be successful, the following three costs and associated revenue opportunities need to be incorporated in the business model:
The capital pool, that is, a redistribution of capital in the community to account for unforeseen circumstances for individuals. This value is equivalent to the average loss ratio of a portfolio. UnoRe will be generating the capital to cover the expected value of risk from the premium paid by customers.
The source of income, with a certain risk assumed. Individuals lock capital in to earn this source of income. The risk of losing this capital is restricted to the case of a black swan event. The compensation for locking capital in is computed based on the lock-up period and the risk. UnoRe will provide investors the opportunity to invest in this risk pool based on their personal risk appetite.
The source of entrepreneurial income should be ideally linked to an increased efficiency of business processes. Like SLAs of claims payouts, client onboarding, and similar. The transaction costs will be paid by the customers in the form of the UNO protocol token
Loss Ratio: The ratio of losses to premiums earned. Losses in loss ratios include paid insurance claims and adjustment expenses. The loss ratio formula is insurance claims paid plus adjustment expenses divided by total earned premiums. For example, if a company pays $80 in claims for every $160 in collected premiums, the loss ratio would be 50%