Corresponding Author

Julian Yu

Document Type



Modern insurance has been operating in the same business model since its inception while its recent IT improvement is mainly for specific functions without overall structural review. This paper is to incorporate the concept of a cryptocurrency, called Risk Coin, as the foundation of a new model to enhance the risk financing efficiency with capital market. Risk Coin is 1) a shareholding token of the premium fund with benefits from law-of-large-numbers, and 2) a cryptocurrency with benefits from seigniorage as fiat currency anchored at value of coin fund formed by collected premium and refund from loss payments. Applications in current insurance environment of pipeline model as well as in an innovative environment of platform model are simulated. Both results show a self-balancing mechanism that higher coin value from less coin preference, therefore, encouraging coin receivers to keep coins. Overall the new model will enhance the effectiveness of risk funding by keeping risk coins and also turn insurance deal to a win-win situation form zero-sum game through premium payment as gaining ownership of risk fund.