MCFAM Seminar - A Unified Theory of Decentralized Insurance

Speaker:  Runhuan Feng

Abstract: Decentralized insurance can be used to describe risk sharing mechanisms under which participants trade risks among each other as opposed to passing risks mostly to an insurer in traditional centralized insurance. There are a wide range of decentralized practices in all kinds of forms developed around the world, including online mutual aid in East Asia, takaful in the Middle East, peer-to-peer insurance in the West, international catastrophe risk pooling, etc. There is also a rich literature of risk sharing in academia that offers other decentralized mechanisms. This work presents a unified mathematical framework to describe the commonalities and the relationships of all these seemingly different business and theoretical models. Such a framework provides a fertile ground for the design and the analysis of hybrid and innovative models.