Policy Lifecycle

A weather derivative policy moves through six stages from initial quote to final settlement.

Stage 1 — Quote Request

The client selects a derivative structure on the dashboard (or Cliff Horizon structures one during onboarding):

• Trigger variable — temperature, rainfall, irradiance, or wind
• Trigger condition — threshold and measurement window
• Payout — maximum amount
• Duration — contract period

The engine calculates lossProb for this specific configuration.

Stage 2 — Premium Calculation

The engine's lossProb feeds into Ensuro's premium decomposition:

purePremium = payout × lossProb × MoC
+ jrCoc (junior capital cost)
+ srCoc (senior capital cost)
+ ensuroCommission
+ partnerCommission
= Total Premium

The client sees the full waterfall on the Derivatives tab.

Stage 3 — Policy Creation

When the client accepts the quote:

1. Cliff Horizon's PRICER role signs the quote cryptographically
2. Signed quote is submitted on-chain to the SignedQuoteRiskModule
3. RiskModule.newPolicy() is called on the PolicyPool
4. PolicyPool mints an ERC721 NFT representing the policy
5. Solvency capital (jrScr + srScr) is locked from eToken pools
6. Premium is allocated: purePremium → PremiumsAccount, CoC → eTokens, commissions → recipients

The client receives their premium invoice in fiat. The blockchain settlement is invisible to the client — handled by Cliff Horizon's infrastructure.

Stage 4 — Active Monitoring

During the policy period:

• The engine continues to monitor weather conditions at the insured location
• The dashboard's Forecast and Scenario tabs show real-time probability updates
• Alert thresholds notify the client if trigger probability increases significantly
• All monitoring data is logged for audit trail

Stage 5 — Resolution

At policy expiration (or when a trigger event occurs during the measurement window):

1. Oracle data is gathered — NWS Climatological Reports, SatSure satellite observations, or other agreed data sources
2. Cliff Horizon's RESOLVER role submits the oracle outcome on-chain
3. RiskModule.resolvePolicy(policy, payout) is called
4. The smart contract compares the oracle data against the trigger condition

Stage 6 — Settlement

Two possible outcomes:

Trigger Hit → Payout

Oracle confirms trigger condition met
  → Smart contract releases payout from USDC pool
    → Client receives payout (fiat via Ensuro's front-end entity)
      → Policy NFT marked as resolved (paid)

No claims process. No loss adjustment. No waiting for approvals. The oracle data determines the outcome; the smart contract executes it.

No Trigger → Premium Earned

Oracle confirms trigger condition NOT met
  → Locked SCR released back to eToken pools
    → Earned premium distributed to LPs and commission recipients
      → Policy NFT marked as resolved (not triggered)

The capital providers earn their return, Cliff Horizon earns its commission, and the client's risk was covered for the period.

Settlement Timing

Dispute Resolution

If there is a discrepancy between data sources:

1. The primary oracle source (defined in policy terms) takes precedence
2. Secondary sources serve as verification
3. If primary source is unavailable, the fallback hierarchy defined in the policy terms applies
4. Ensuro's protocol governance provides a final arbitration mechanism