Concept: Structural Bonds Property Insurance
This innovative property insurance system focuses exclusively on covering the structural components of a building (roof, walls, flooring, and foundation). It introduces a market-driven approach using structural bonds, an investment-based model that leverages the stock market to maintain and replace damage to structures caused by natural disasters or other risks. Key Features:
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Structural-Only Coverage: Covers the structure (roof, walls, foundation, flooring).Personal property, fences, sheds, and other fixtures must be insured separately via private insurance providers or riders.
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Structural Bonds Investment: Property owners purchase annual structural bonds, which are invested in the stock market.Artificial intelligence (AI) determines bond requirements based on location, structure size, and area risk factors.The bonds generate interest over time, which accrues toward repair and replacement costs.
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Risk-Based AI Calculation:AI calculates the required bond contribution amount annually. It t analyzes local repair costs, risk levels (e.g., hurricanes), and property value.Risk-adjusted investment strategies are offered: High, Moderate, or Low Risk.
4.Vesting Milestones:•Partially Vested: Once the bond fund accrues 25% of the structure’s replacement value, the property owner contributes less to the national crisis fund.• Dividends: Partially vested owners can choose annual dividend payouts or reinvest earnings to grow their fund.5. National Crisis Fund Contribution:While building their bond, owners pay into a national pool to cover collective risks during catastrophic events.
Example: $300,000 Structure in a Moderate-High Hurricane Risk Area
Initial Setup:
Replacement Value: $300,000
Required to accrue 25% of replacement value for partial vesting: $75,000
Location Risk Factor: Moderate-High (hurricanes)
AI calculates bond purchase schedule and investment strategy.
10-Year Bond Purchase and Growth Plan: Annual Bond Contribution: $5,000/year.
Investment Growth: AI predicts 7% average annual return for a moderate-risk strategy.
Total contributions after 10 years: $50,000.
Year-by-Year Growth (Moderate Risk Investment):
Year Bond Contribution Cumulative Contributions Interest Earned Total Fund Value
1 $5,000 $5,000 $350 $5,350
2 $5,000 $10,000 $1,095 $11,095
3 $5,000 $15,000 $2,102 $17,102
4 $5,000 $20,000 $3,297 $23,297
5 $5,000 $25,000 $4,700 $29,700
6 $5,000 $30,000 $6,329 $36,329
7 $5,000 $35,000 $8,210 $43,210
8 $5,000 $40,000 $10,373 $50,373
9 $5,000 $45,000 $12,850 $57,850
10 $5,000 $50,000 $15,680 $65,680
Outcome After 10 Years
Shortfall for Partial Vesting: $75,000 (Required) - $65,680 (Fund Value) = $9,320.
The property owner is near partial vesting and can:
Continue to invest for another 1–2 years to reach the target.
Pay a smaller percentage into the national crisis fund during this time.
Post-Partial Vesting Options:
Once $75,000 is reached, annual contributions to the national crisis fund are reduced based on local risk levels (e.g., hurricane risk may require 10–15% of pre-vesting contributions).
Owners can opt to reinvest dividends or take partial payouts (e.g., 2–3% annual dividend on the accrued fund).
Benefits of Structural Bonds Model:
Personalized Risk Management: Owners select investment strategies that align with their risk tolerance.
Reduced Premiums: Lower overall cost compared to traditional full-coverage property insurance.
Wealth Accumulation: Contributions grow over time, providing an asset rather than a sunk cost.
Risk Pooling: Contributions to the national crisis fund ensure a safety net during catastrophic events
This model provides a sustainable and scalable way to insure structures while empowering property owners to control their investment and risk strategies.