2.7.3 I - AC Interdependence
Last updated
Last updated
The term "I-AC interdependence" describes the crucial relationship between insurance providers, asset authenticators, and compliance validators. Here’s how it works:
The asset administrator must then issue a legally binding declaration of trust. This confirms that the asset's status, as recorded on the blockchain, accurately reflects its real-world factual and legal condition.
That declaration can be supported with proper authentication and compliance verification processes, which boosts the asset credibility, otherwise such a declaration will still be valid, but without any credibility attached to it.
Issued assets can be connected with insurance policy - before it’s finalized, insurers calculate an insurance risk score.
This score hinges on the outcomes from asset authentication and compliance verification processes, in case they are missing, insurance cost would be either extremely high (due to high risk) or wouldn’t be issued at all (further decreasing credibility of trust declaration issued for the asset)
In case insurance is issued, and this declaration is breached—whether through intentional wrongdoing, negligence, or uncontrollable circumstances - the insurance provider is obligated to compensate any affected parties in the asset chain for their losses caused by the breach of trust.
Subsequently, the insurance provider may seek compensation (a regress claim) from any party whose actions led to the insurance event. This includes the asset administrator, the owner (if the administrator acted in good faith based on inaccurate information from the owner), the authenticator, or the compliance validator. The process for pursuing these regress claims will take place outside the OAE framework.
Insurance companies offer liability insurance to both Authenticators and Compliance Providers. While arranging this insurance doesn't necessarily need to happen via OAE, leveraging it for formalizing and disclosing the insurance through smart contracts (termed A-I for Authenticators and C-I for Compliance Providers) enhances the reputability of these service providers. This increase in trustworthiness, in turn, makes them more competitive and attractive as providers in their respective fields.
If Authenticators or Compliance Validators decide to arrange their liability insurance through OAE, the reputation score of the Insurance Provider they’ve selected will impact their own reputation score.
