💰Pricing Models

The insurance industry is primarily an endeavor of hedging against uncertain future loss, in which the insured trades risk with the insurers via premiums and insurance contracts. Therefore, "insurance products" pricing lies at the core of any insurance business, and Pharo has its unique way of pricing cover as well.

Most pricing models in current blockchain-based insurance communities heavily rely on the value staked on individual protocols: the higher value staked for the specific protocol, the lower premium will be priced. This staking-driven pricing structure fails to assess each protocol's real risk and is very likely to significantly over-estimate the premium of those less staked protocols.

Pharo will adopt new actuarial-based pricing models to substantially mitigate this issue to assess the expected loss of cover products fairly, reduce costs, and enhance capability.