👨‍💻Use of insurance funds

Maximum Available Cover is calculated by a predefined formula.

Capital Pools design disallows withdrawing Capital and/or depositing more Premium if that action would result in a situation where the maximum payout coil exceeds the maximum cover.

Because the deposited Premium flows into the Capital Pool, while the Maximum Available Cover stays the same, space to either withdraw some of the capital supplied or purchase additional coverage is freed.

Periodicity

Insurance policies follow cycles which are characterized by a Birthtime, a Duration, and an Expiry Date.

The rollover price is a coefficient acquired at the end of the cycle by dividing the remaining amount of deposited Premium by the total amount of Premium deposited by the Policy Buyers. This coefficient influences the Insurance Capacity. Rollover essentially resets the Insurance Capacity to almost zero, freeing up most of the supplied Capital allowing the Capital Suppliers to withdraw some profits and/or allowing Policy Buyers to buy coverage for the following cycle.

The same amount of premium buys a different amount of cover depending on the stage of the cycle at which it is deposited. If the market is underutilized, a significant portion of unused deposit is retained after the rollover. Then, a lower Premium will have to be paid to buy coverage. Symmetrically, if the market is overutilized, a significant portion of Premium is burnt. After the rollover, most of the cover is wiped out.