Policy Termination

Protocol Improvement Proposals
1

Objective:
1.The objective of this proposal is to provide policyholders with the flexibility to cancel their active insurance coverage and receive a refund for the unused portion of their policy.

Policyholder Rights:
1.Policyholders ahould have control over their insurance coverage and the ability to opt-out if desired.
2.In DeFi protocols, it is common for yields to fluctuate, presenting an enticing opportunity for users to maximize their returns. However, the challenge arises when the yield unexpectedly decreases, potentially falling below the percentage covered by their insurance.

Refund Calculation:
Refund Amount = (Remaining Days / Total Days) * Premium Amount

In this formula:
“Remaining Days” refers to the number of days remaining in the insurance coverage period.
“Total Days” represents the total duration of the insurance coverage.
“Premium Amount” is the initial premium paid for the insurance coverage.

Governance and Implementation:
1.The cancellation and refund mechanism will be governed by the Olympus DAO.

Terms and Conditions:
1.The Olympus DAO holds the authority to determine any applicable fee associated with policy termination. This decision-making power allows the DAO to ensure the sustainability and effectiveness of the insurance protocol.

Refund Amount = (Remaining Days / Total Days) * Premium Amount - Any Applicable Fee

Conclusion( My personal thoughts ):
1.While this specific feature may not have been implemented by other protocols yet, it aims to provide policyholders with greater control and participation.
2.Introducing a cancellation and refund mechanism has the potential to boost insurance coverage adoption on our dapp.

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2

That’s actually a quite reasonable suggestion having several deciding factors:

Firstly, with Cover Portal, a policyholder has the option to select the duration of their policies. Now, if we permit policyholders to cancel their policies, this might encourage more clients to opt for covers with extended timeframes since it lowers the initial commitment.

Secondly, as you pointed out rightly, yields tend to fluctuate over time causing difficulties for clients, especially when they have procured a policy for a long-term period.

However, we should also consider the flip side. This could potentially destabilize the protocol’s cashflow. This shift could pose significant challenges to the burn and revenue-share model.

To counter this, it would be prudent to introduce a cancellation fee. This measure could mitigate the impact of possible cancellations on the protocol’s stability.

Thanks for sharing such a thoughtful suggestion. It’s definitely worthy of further discussion among the Uno Re community. Researching the potential ramifications of such a decision would be a good starting point for its implementation.

Rest assured that your proposal will be taken into account. As the Uno Governance members deliberate on the process, they can decide on the most suitable course of action!

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