In industrialized countries, legislation and prudential regulation address these challenges by specifying minimum capital levels, governance systems, assessments, and regular financial reporting.

Blockchain technology and smart contracts can strip out inefficiencies and costs by providing trust much more cost-effectively.

Nexus Mutual‘s Solution

• MEMBERSHIP TRACKING — A way to track individual members, including their proportional ownership.
• CLAIMS ASSESSMENT METHODOLOGY — A way for claims to be approved or declined.
• CAPITAL MODEL — to establish the amount of capital needed to support the risks at any given period.
• FUNDING — Ability to attract capital to back the risks and reward that capital appropriately for the risks taken. Initially and on an ongoing basis.
• INVESTMENT RETURNS — Insurers hold customers’ money until a claim event occurs. During this time they tend to invest these funds, usually quite conservatively, to earn additional returns.
• PRODUCT — A viable product to sell, including underwriting rules and other acceptance criteria.
• PRICING — A method for determining the fair risk charge for the risk cover and a way for it to adjust over time.
• DISTRIBUTION — Tools and incentives to attract new members to the mutual.
• IDENTITY — An identity module will be required as part of the sign-up process to conform to legal and regulatory requirements.
• GOVERNANCE — A way to upgrade, enhance and fine-tune the code in line with the wishes of the membership base, as well as the ability to interact with the non-blockchain world.
• TRANSPARENCY — Real-time reporting of capital position and risk exposures.
• LEGAL FRAMEWORK — A safe legal and regulatory environment to operate within.

Membership

Nexus Mutual Mechanism Analysis. People can join the mutual and become members. Members can buy a cover to protect against material losses when transferring funds into a protocol’s smart contracts or keeping funds with a custodian. Nexus Mutual is a discretionary mutual. Each member can hold NXM tokens, which represent proportional ownership of the mutual.

Things the members can do:

• Buy discretionary cover products.
• Contribute funds to the mutual and hold NXM tokens.
• Governance: Members are encouraged to vote on proposals or put forward their own proposa
• Share risk with other members.
• Act as Risk Assessor.
• Act as Claims Assessor.
• Put forward governance proposals.
• Vote on proposals put forward by the team or other members.

Things the members are responsible for:

• Governance: Members are encouraged to vote on proposals or put forward their own proposals.
• Risk Assessment: Members may bet on the security of a protocol or custodian. Before buying protocol or custodian insurance, enough staking must occur.
• Claim Assessment: Members may review Nexus Mutual claims and receive NXM incentives for good, honest contributions. Members stake NXM, debate a claim’s veracity, evaluate statistics, and vote on whether to pay out.

Nexus Mutual has built an on-chain insurance platform and overcome several typical insurance problems. Some parts require improvement to better meet user demands.

About Degis

Degis, the all-in-one protection market built on Avalanche, aims to protect your asset from every possible risk. The ultimate goal is to build an universal crypto protection platform and shape decentralized protection ecosystem.

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SOURCE:

https://degis.medium.com/insights-into-the-insurance-market-nexus-mutual-mechanism-analysis-1ad98c1891f9