I thought of this scenario. Straw borrower. Using more than one Alias is trivial. Why not lend 10 BTC to my fake self , pay for the insurance and get a free 4.5 BTC? Would you also buying the right to recover from the defaulting borrower they caused the claim to be paid?
Insurance is not a simple endevour. Even the way it insurance is in the mainstream, it's rife with fraud. By the Ins. companies and policy holders .
I back the insurance idea 100%. Getting it right is the hard part.
Right, it's the old let me kill my "fake friend" to get his life insurance policy trick. At some point there is always going to be a risk it's just a matter of whom do you want it to fall upon. If we find 100 percent of lenders are making claims for fraudulent lending then we are out of business I would think?
It doesn't need 100% of lenders to claim for you to be out of business. Just needs a percentage where the 50% refunds exceed your total refunds you have to give.
so if your average loan was 5BTC then you'd be repaying 2.5btc per claim. With your fee being 0.25BTC that means you make a loss if more than 10% of loans end up in claims.
I'm really not getting the impression you've put too much thought into this. E.g. things you haven't covered:
1. Your website has no rules on criteria borrowers must meet.
2. You appear to be charging a fixed fee of 0.25. So if I loan someone 1000 BTC you'll give me back 500 if they steal for a fee of 0.25? i.e. you're saying there's a 1/2000 chance you'd have to pay out?
3. You've given no statement about or proof of your liquidity. i.e. if the FIRST loan you insure gets stolen do you even have the BTC to give the insurance payout?
4. You've not indicated how you decide whether a loan has been stolen. Do you pay out 1 week after they haven't repaid? 1 month? 1 year?
You seem to have just put up a web-form and then hoped people will send you 0.25BTC with no details provided. The only people who will take you up on that are scammers.