Dear MD, \o?
Together with my good corp mate, we have an idea to offer a financial service that could benefit both the customers and investors to the program.
It is still rather early stage to disclose & discuss the full details on the forum, but I would like to see a) if there's some interest in this from potential investors, b) invite people to join the discussion, where I will send out a group memo/eve-mail to outline more details and progress the discussion towards actual implementation of the program.
While there are many rough ideas, the first one I would like to start with as our 'project' is player driven insurance program.
The idea is simple
1. The client buys an insurance program from the insurance corp
2. The client could be a single pilot, or a corporation or even an alliance (probably start small though)
3. The target for the insurance is freighters, citadels and ECs
4. The idea is that the Insurance Corp offers some degree of pay out in case the client suffers loss of relatively high-value assets of the above types
5. Each client will have his/her/their risk level assessed based on their past loss records as well as other variables that may come into play
6. When the insurance fee per month and the duration of the insurance is agreed between the client and the insurance corp, the insurance shall start
7. If the client loses his insured asset during the insurance period, the insurance corp will pay out the client according to pre-defined rate as agreed during the insurance contract phase
8. The main principle is that an early loss of the insured asset will not be a good option for the client, as the asset will not be fully covered until the client has paid X value of the insurance fee. This shall act as a basic means to prevent insurance fraud and also to ensure that the insurance corp can maintain good reserve fund that can be put into work to keep the capital growing
9. Aftger X months (or any other given time depending on the contract) of insurance fee has been paid, the client will find that he can enjoy the maximum coverage for his insured asset
10. After the insurance contract has expired, the client shall receive 100% + x% of the insurance fee he has paid during the period, effectively profitting from the insurance scheme as a form of slow-investment
11. The benefit for the insurance corp is that it can use the insurance fee income to engage in various other trade, production and investment activities, while keeping a safe buffer for early pay outs in case of loss for the clients (with limited pay out rate before X number of months has been reached).
12. Simply put, it could work like this - the Insurance Corp estimates that it can make 10% profit on its collected fund over the period of 6 months. The policy can be set up so that the clients will be paid out 103% of their insurance fee paid upon completion of the insurance contract. This leaves profit margin for the insurance corp over long term (just random numbers at this point)
13. Of course, one of the main issue is that the insurance corp needs to have enough buffer ISK to make this work, and to achieve this, I am willing to invest in my own ISK (+assets as collateral) but I would be happy to have other investors on board, who will get the cut of the Insurance Corp's profit while helping the insurance corp to maintain healthy reserve fund level + enough excess ISK to seize investment opportunities.
So in summary;
A) No insurance fraud. The most ISK a client can make will be if he does NOT lose his ship/asset and the insurance period runs its course to the end, in that case the client will make similar ROI as a common bonds found on MD, but without putting up a lump sum up front, instead he shall be putting in monthly payment as insurance fee. This is pretty good deal as a savings/investment
B) If anyone loses their asset deliberately to claim the insurance ISK, the time frame where the claimed ISK will be 'worth it' will be the time that the insurance corp has gained enough value from the monthly fees received, hence no loss for the insurance corp at that point. The loss value, NPC insurance rate, amount of insurance fee paid up to that point by the client, the insurance duration and all these factors will be calculated into the pay out rate
C) Multiple clients+big enough buffer from the investors should ensure that the insurance corp will run relatively stable, and generate steady long term profit, despite some sudden dips when big pay outs need to be made (but again, this shall be controlled as much as possible)
Anyways, this is the rough idea. We have already made some calculations on possible rates and such based on some randomly picked zkill loss records of various corps (just so we have some practical sample data to see what the numbers will be like), and I believe with variable rates, duration and coverage % it will be possible to run such an insurance corp that can benefit both the client and the investors.
As it is still very early stage and I'm just testing water, I will not disclose and discuss the calculations/formula here for now. But I would be happy to receive anybody's input on this as a general concept, and also if anybody would be interested in investing in such an insurance fund.
We can hold basic discussions here, and if there are sufficient interest from potential investors we could move the discussion to in-game mailing list, where the actual numbers can be discussed & put under close scrutiny, so that we can agree on the optimal value for the investors while keeping the insurance service an attractive option for potential clients.
Thanks in advance for your feedback.