Vaerah’s services: Insurance

Introduction

Insurer, along with auditor, is one of the least common EvE^® Online meta professions. For a brief background about EvE meta professions please look here. Insurance, in the context of this web site, is not the basic EvE ships insurance but a financial instrument born to insure all sorts of more or less risky activities in EvE, including trading, BPO transporting and so on.

Insurance has a lower entry barrier than auditing, but it still requires:

• complete trust by all the involved parties,
• requires the insurer to be quite wealthy to begin with,
• requires the insurer to be proficient at appraising the insured goods,
• requires the insurer to have a functioning business plan, a plan that has to work in a game with no punishment for frauds and scams.

The above requirements make sure there are never more than 1-2 active insurance companies. After the proponents of the last player driven ship insurance company (do not mistake it for EvE’s default NPC ships insurance) seem to have given up, there’s currently only one active insurance company: Vaerah Vahrokha‘s.

What is an EvE insurance policy?

Insurance is a contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. An EvE insurance policy applies to EvE assets, securities and stock.

What is an EvE insurance company?

An EvE insurance company is an EvE corporation issuing EvE insurance contracts.
It’s important to discern the difference between the EvE’s default NPC ships insurance and a player driven insurance company. The former is a pure NPC based ship loss reimbursment program. The latter is a proper, player driven, emergent meta profession.

It’s also worth noting how EvE non-ship insurance companies are more similar to a specialist business like LLoyd’s of London™ than the classic “standard car insurance for everyone”. Their contracts are created and customized around a specific deal, transaction, business or investment.

The most common transactions involving an insurance policy are:

• Loans / bonds / IPOs. The policy may be created to protect the investors against scam and default.
• Speculative investments, where the speculator wants to protect against risk.
• Collateral value protection. The policy covers possible collateral depreciation. In case the collateral tied investment fails, the insurer will pad the possible losses at liquidating the collateral.

What is appraising?

Due to the specialty nature of EvE insurance contracts, EvE insurance companies cannot rely on wide spectrum statistics like real life companies do. Appraising is the act of estimating the quality, amount, size, and other features of a subject. In EvE’s context the subject is the item, asset, security to insure. Appraising is relatively easy when the collateral consists of items like BPOs (in high sec they usually sell at least for close to NPC price, even in case of firesale) but becomes hard and risky in case of speculative, volatile and / or low volume market items.

Follows an example about how Vaerah Vahrokha appraises depreciable items to be used as collateral.

A player wanted to get a 3B loan (he called it “a bond”). He created a thread on Market Discussion stating how his loan was fully collateralized and disclosed the collateral: Tornadoes and an Obelisk. Here is the appraising process that was made about the Obelisk, to figure out at that time it’d not be worth as much as claimed (1.6B) but about 1.4B.

1. Collateralized investments usually involve posting at least 100% of principal + interest worth of collateral. In this example such collateral would have to be worth 3B + 10%= 3.3B. The offered collateral, instead, would not even cover the 100% of principal.
2. Depreciable collateral may not be evaluated at sell orders price for the current day. In fact, depreciable collateral may both sensibly rise or fall before the collateralized investment matures.
3. Furthermore, in case of default, investors usually pressure a lot in order to have collateral immediately liquidated. Expecially in case of slow / illiquid markets items (like Obelisks) this means dumping them on buy orders. At the time the buy orders were about 1.45B. The way too wide spread between buy and sell orders suggested there was a market manipulation in progress, therefore the Obelisk value would be prudentially set to 1.45B tops.
4. This first collateral evaluation was followed by a more in depth market analysis.
   This analysis results have been posted as a reply to the loan proposal.

Typical insurance workflow

The following is a typical suggested sequence of tasks to perform in order to complete a transaction by using a Third Party Service. Please notice how the sequence may take vast modifications depending on the exact transaction kind and on the possibility for some of those transactions to happen between two actors and not three.

1. In case you are interested in a character / corporation check or an audit please refer to the specific article about them.
2. For publicly tracked transactions / lottos, create a transaction prospectus draft but do not post it right now. Many hastily cobble a terrible prospectus together, post it on the forum and act surprised when it invariably gets flamed by other players. Don’t do that, it’s possible you won’t even get the Third Party Service to accept working for you.
3. Contact a Third Party Service representative. Have ready the details including possible requests about what to do in case something goes wrong. Certain jobs will require to share your characters or corporations API keys with the Service itself. API keys are created at this EvE Online web site page. Examples of such jobs are: checks, audits and lottos collateral holding.
4. The Third Party Service representative will state the fee for his work. Depending on the kind of work, the fee will be paid by one or both the parties.
5. Listen to the possible representative suggestions and criticism and update the prospectus (public transactions) accordingly and send the new draft revision to the representative for further review.
6. After prospectus is OK, proceed posting it (public transactions). The Third Party Service representative will usually add his own confirmation.
7. The first party contracts / sends the item(s) / securities plus fee to the Third Party Service.
8. The Third Party Service will post (public transactions) or contact the second Party and clear them to send the agreed money / other items to the first party.
9. The first party confirms (and, for public transactions, posts on the forum about) the succesful receipt to the Third Party Service representative, who in turn will deliver the held item(s) / securities to the second party and (for public transactions) post about the succesful operation on the forum.

Third Party Service gotchas and cautions

• Do not trust the first guy pretending he is a trusted Third Party Service! EvE does not punish scammers and thieves. You are meant to do your due diligence and find out who you may trust. Third Party Services often are one man operations, usually heavily advertising their flawless track record and testimonials. Fake testimonials may be produced by fraudsters but they are usually easily spotted. Third Party Service customers are typically elder, wealthy members of large alliances while fake testimonials will easily show up as NPC corporation, younger players, sometimes their posts will be clustered in a short time frame (i.e. 5 players posting within 1 hour).
• Do not trust the first guy pretending to be a celebrity Third Party Service! While EvE End User License Agreement forbids character impersonation, there have been many attempts at creating characters with the same name of famous Third Party Service representatives except for a letter, replacing an “O” with a zero and so on.

Known, established Third Party Services

Here is a list of the most known Third Party Services. It’s in alphabetical order so not to hurt anyone’s sensibility. Notice how some of them may be currently inactive. There are recurring threads about those Services listing their names as well.

Chribba.
Darkness.
Grendell.
Shar Tegral (no capital or super capital ships).
Vaerah Vahrokha (focused on Finance / blueprints / speculative stocks related topics, SCC Lounge and in game acquaintances).
Wirox Crotikus.