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Reader Comments (7)

Posted: Aug 11th 2010 11:22AM mmark said

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Why not make insurance pay back minerals based on a percentage of the total minerals to build the ship?

Posted: Aug 11th 2010 11:35AM ScottishViking said

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Because ship insurance rates are determined on a set percentage rating. Tying insurance rates to market prices of minerals would be an enormously complicated process, where insurance rates would vary wildly depending on where you insured your ship. CCP's direction with Insurance may be slow but they're taking the right steps here.
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Posted: Aug 11th 2010 11:58AM Brendan Drain said

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That's actually a solution I suggested years ago, and I think it would work for Tech 1. What CCP are essentially doing is making insurance based on market prices of the minerals that go into the ship. It's a good idea, but manual balancing is tricky.

My ideal insurance system for tech 1 ships would involve you paying a monthly premium for an insurance contract that covers all your tech 1 ships. When they're destroyed, your insurance company would deposit 70% of the minerals required to build the ship into your insurance station. That removes mineral prices from the equation entirely, ensuring that every single ship gives you 70% of its build cost back on destruction. This is equivalent to paying a 30% premium and getting 100% back, but it removes mineral prices as a problem so no manual adjustments are ever required.

One of the major downsides would be that the demand for minerals would drop by up to 70% almost immediately. Another is that it might not work so well on tech 2 and 3 ships, where a lot of the cost is in invention and reverse engineering blueprints and the waste produced by invented blueprints. However, having seen the results of CCP's balancing attempt on insurance, it doesn't seem to be faring that much better. The new system doesn't adequately cover tech 2 or 3 as promised, and it'll need constant adjustment as mineral prices fluctuate.
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Posted: Aug 11th 2010 12:21PM ScottishViking said

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I don't think it "removes mineral prices from the equation entirely" so much as put them a step back from the equation. But the true mineral costs are all factored in there somewhere -- the question is, who is absorbing the costs? And yes, as you mention, mineral prices would nosedive. Miners would be on the real outs with this concept, but manufacturers would obviously love it. The problem is, all the money that miners are currently making would be lost to the new insurance system, and you wouldn't necessarily see a corresponding jump in ship prices. So most of the money "to be made" on this new system would just disappear, except in overhead costs by the manufacturers.

I think CCP's system is imperfect, but with the appropriate number of adjustments, it can work. But it does actually require fiddling.
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Posted: Aug 11th 2010 3:33PM Joshua Przygocki said

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That name is awesome.

Posted: Aug 11th 2010 2:19PM (Unverified) said

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Old insurance system acted as a buffer for minerals to prevent them falling in value. With new system, its only natural mineral prices would go down. Only thing holding mineral prices right now is the insurance pay itself.

As for the insurance to pay percentage of the mineral cost, I don't think CCP can do this without some of the giant entities abusing this to their own ends. Even though EVE market is huge, it is prone to mass manipulation, has happened before, will happen again.

Sometimes I think removing insurance altogether and making some changes to trit dependence, would bring back the risk vs reward mining once again. Would be interesting where the prices would balance out.

Posted: Aug 11th 2010 2:26PM Brendan Drain said

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Well it's not possible to abuse it since it's impossible to make a ship for less than 100% of the minerals that go into it. No matter what the price of minerals on the market, getting a percentage back on destruction can't produce more value than went into the system for any given set of prices. It can't be manipulated.

The current insurance system, on the other hand, relies on the economist manually changing things. If players were to manage to manipulate the statistics he uses (say through long-term price manipulation on minerals), he might inadvertantly play into the manipulator's hands by assuming the market price was reached through normal market forces.

Thankfully, I don't think that's going to be a problem. The sheer number of players trading in Jita alone is sufficient to put a huge downward pressure on upward price manipulations, making it unimaginably costly to keep them going for months on end. And since the insurance price tweaks are bound to be infrequent, it'd be almost impossible for any market manipulator to make an impact on the insurance changes without wasting hundreds of billions.
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