Cycles
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.