Thinking more about the insurance model I think it could work out if we just increase the fee for the seller in case he wants an insurance. It can be 0.5% or 1% of the trade volume and the arbitrator would handle the insurance.
So the arbitrator earns a bit more for those who want insurance and will refund victims in BTC if it is a clear case.
To avoid insurance fraud he will be very strict and the seller need to have followed the trade protocol (e.g. have not accepted a payment with incorrect payment details or reference text). Further he need to provide tamper proof evidence either with Pagesigner or with screensharing/video call etc. ID verification to the arbitrator might also be considered to avoid repeated scams (one could trade with oneself and issue a chargeback and request the insurance refund then). Though that is difficult as we see in the case of @ElGuapoAmigo where he got scammed as only victim 5 times at nearly the same time. Such a case would look suspicious for the arbitrator and it cannot be clearly separated from repeated insurance scams. Maybe we would need a max refund per trader as well to limit such risks?
It would be an experiment if it works in practice so that the insurance scam rate is low enough that it works. Also the question what users are willing to pay for such an insurance.
The arbitrators take considerable risk by providing that extra service, so that need to be compensated good enough otherwise they will not offer that service.
We could start with a higher fee and once a good reserve fund has been allocated we can reduce the fee if there are few cases.
If the insurance is optional we need to add that information to the trade data so that the arbitrator can verify that in case of a dispute. The fee payment would not be an extra payment but just an increase of the normal trade fee. From the fee amount the arbitrator cannot derive that information as the fees are dynamic and depend on trade volume and market distance.
If we would make it mandatory and just increase the fee for the seller that problem would not exist. It is not a real problems just more effort for implementation. It would also reduce complexity for users (no need to make a decision) and creates a larger insurance body.
The arbitrators would get a strong voice for new payment methods to get added if they are primarily exposed to the risks. We could add an informal rule that the arbitrators need to agree to a new method by 80%.
Once the DAO is complete and the new arbitration system in place the fees can be set by voting and the arbitration system will be more a market place with competition, but that will take time to get there…
What do you think?
What would be the max. acceptable fee for such an insurance?