Takadao Docs
Takadao Whitepaper v2 (tDAOs)
Takadao Whitepaper v2 (tDAOs)
  • Introduction
  • PART A. BACKGROUND
    • 01 - The Insurance Industry
      • Origins of insurance: Mutual protection and risk-sharing
      • The rise of the modern insurance industry
      • The insurance industry today
      • Key Consumer Complaints Against Insurance Companies
    • 02 - Introducing Takadao
      • Takadao: Addressing Consumer Complaints and Industry Challenges
      • Basics of the Blockchain
      • “Taka DAOs (tDAOs)” vs. Centralized Insurance Companies
  • PART B. TAKADAO: THE DAOs
    • 03 - Takadao Technology
      • The Takadao technology stack
      • tDAOs’ user journey
        • Risk assessment and KYC
        • Contribution
        • Membership Credits
        • Get a Payout
        • Redistribution of Surplus
        • Participate in Governance
    • 04 - Underwriting & Risk Management Algorithm
      • Introducing Dynamic Underwriting
        • Absence of capital providers
        • Fluctuating reinsurance protection
        • Using data in real time
      • Takadao dynamic underwriting: A closer look
      • Risk and the Benefit Multiplier (BM)
        • Individual risk and the Base Benefit Multiplier (B.BM)
        • Portfolio risk and the Benefit Multiplier Adjuster (BM.A)
      • Dynamic Underwriting Reserves
        • Calculating the Benefit Multiplier Adjuster (BM.A)
        • The Dynamic Reserve Ratio
        • How underwriting surpluses are calculated
    • 05 - tDAOs’ Tokens aka Membership Credits
      • Membership Credits
      • Make a contribution, receive Membership Credits, become a member
      • Membership agreement
      • Redeem/burn Credits, exit the DAO
      • Credits determine insurance benefit
      • Discontinuing membership before contract maturity
    • 06 - Benefits Payout Protocol
      • Decentralized Benefit Payout Management (DBPM) - A multistage process
        • Stage One - Document Review
          • Pre-verification
          • Manual Verification
          • Stage One Results
        • Stage Two - IRL Verification
          • Stage Two Results
        • Stage Three - Professional Review
  • PART C. TAKADAO: THE COMPANY
    • 09 - The Takadao Vision
      • Vision & Mission
      • Business Model
      • Shariah compliance
    • 10 - The Takadao Token (TAKA)
      • Token Utility
        • TAKA for Fees
        • TAKA for Staking - Reprotection Pool (rePool)
        • TAKA for Rewards
        • TAKA for Governance
      • Token Supply and Distribution
        • Token Supply
        • Token Allocation
        • Token Emissions Schedule
      • Value Accrual and Price Stability: Sources of Token Demand
        • Buy Back and Burn (BBB)
          • Schedule for BBB
          • Mechanism for BBB
        • rePool Staking
          • Benefits of rePool
          • Distribution of rePool yield
          • rePool Loan Support to tDAOs
          • tDAO to rePool Loan Repayment Modalities
        • Lock-up and Vesting Schedules
  • References
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  1. PART A. BACKGROUND
  2. 01 - The Insurance Industry

Origins of insurance: Mutual protection and risk-sharing

Previous01 - The Insurance IndustryNextThe rise of the modern insurance industry

Last updated 10 months ago

The concept of mutual protection from shared risks is inherent in human nature. Mutual protection is one of the main reasons why communities exist. In ancient times, groups of people formed tribes and settlements that pooled resources to survive against forces of nature or against enemies.

Insurance arose as a form of mutual protection that is financial in nature. Instead of proactive protection, insurance represents reactive protection. Rather than trying to prevent something bad from happening, insurance strives to mitigate the negative effects of an event with money. We can’t prevent an earthquake, but we can make sure there’s enough money to rebuild after the earthquake damages our homes.

. Shipowners would pledge their ships to a lender in exchange for a loan to cover maritime risks. If the ship was lost during the voyage, the loan would not have to be repaid. In the 7th century, the tribes of Arabia had a system called due as a result of an accidental homicide. In the 10th century, there was a common maritime practice known as the “General Average”. If a ship got into trouble, the ship captain would throw some cargo overboard to save the ship. Since doing so would save the remaining cargo, merchants collectively agreed that they would compensate the merchant whose cargo was lost.

In Europe, insurance as a formal activity arose alongside benevolent societies and fraternal organizations for people with a similar background and shared risks. Things really kicked into high gear with the advent of cities, the rise of the maritime industry and the industrial revolution. Suddenly, there were many different types of risks that people needed to protect themselves from and the stakes were getting higher. Fires in densely populated cities would wipe out entire communities.

Some of the earliest hints of insurance date back to the 4th century with bottomry bonds
Aqilah which made tribe members collectively responsible for paying the blood money
Many mutual protection communities arose, risk mitigation based on solidarity was widespread among guilds, trade associations and village communities.