Greedy Goblin

Wednesday, June 6, 2012

Insurance system: welfare for bad PvP-ers

It's usually considered that EVE is a place where you must own up your losses. That's not true in several cases, thanks to the totally messed up insurance system. It doesn't have any characteristics of a real insurance and serves only as welfare for bad players, especially bad PvP-ers.

There are four trivial rules that an insurance system must keep:
  1. You must pay insurance fee to get payout on a loss: Can it be any more trivial? Not in EVE, where you get the 40% for free, without paying anything to the company.
  2. Profitable, or at least neutral for the insurance company: the insurance companies make profit from getting more insurance fees than they pay out for losses. In EVE, about two times more ISK paid on ship losses than the players pay on fees. (if you have a link to the CCP Diagoras stat please comment, I can't find) This introduce ISK to the system, causing inflation. Inflation is "the tax of everyone", so the community pay for the losses the bad players suffer because of being bad.
  3. No payouts for self-inflicted losses or losses suffered due to serious negligence. If you burn down your house purposefully, the insurance company won't pay. If you get injured during extreme sports, they won't pay either. In EVE the only CONCORDED players are excluded. The others are reinbursed for looking for trouble and finding it.
  4. The fee depends on risks. In every real insurance, you pay depending on your personal risks. The health insurance is cheaper for a 25 years old healthy guy than for a 50 years old fat manager. In EVE if you never lost a ship in 8 years, you still pay the same fee as the guy who lost 3 dreadnoughts this month.
This must end! The community and the smart players shall not carry the bad ones, especially those who looked for trouble. I suggest the following changes:
  • Get rid of the 40% welfare payment! If one pays no insurance fee, he shall receive nothing.
  • Introduction of "risk ratio": this is a value on the character sheet, it's calculated as decayed insurance payouts divided by decayed insurance fees. If you paid 100M fee and got 50M payout your ratio is 0.5. Old fees and payouts are decayed by 5%/month so making newbie mistakes at the start won't haunt you forever. Also there can be a fixing factor, about 50M/month extra payment is calculated into the formula to prevent one loss to destroy the risk ratio. Please note that the risk ratio is unaffected by uninsured ships.
  • If a guy has 2x higher risk ratio than another guy, he must pay 2x higher fee for the same insurance. It naturally means that for some people the fee is higher than the payout on loss, making them ineligible for insurance. They must wait until the decay and the 50M/month fixing factor decreases their risk ratio.
  • The base cost is calculated to make the insurance system ISK-neutral. If the insurance company gets into debt, they rise the fees to get to zero again.
  • Looking for trouble should make people ineligible for payout. This includes: being concorded, killed by faction police, killed while having can-flipper timer, having less than -5 sec status at the point of loss, participating in faction war, mutual war, or in a war where you are aggressor or mercenary, being an attacker on a non-red, dieing to someone who had kill rights on you. The insurance company shall send you a notification why they refuse to pay.
Just because you can PvP, it doesn't mean you shouldn't bear the consequences of your actions. Fixing the insurance system is necessary to make EVE more fair (= harsh, unforgiving).

Wednesday morning report: 39.9B. (1 PLEX ahead, 1.1B spent on LCT, 0.1 on Rorqual)
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Xaeroflex said...

The consequences of PVP come from several things:

1). Current insurance doesn't factor mods into the equation which is significant once you start T2 fitting ships. Often the cost of the hull for T1 ships is a relatively minor part of the loss (eg 10m for a Rupture hull, 20m in fittings).

2). In the same vein, faction ship insurance is very minor because of market added value rather than mineral value. A Fleet Tempest has the same mineral value as a vanilla Tempest, but costs significantly more (300m vs 150m).

3). Rigs are another factor. Armor rigs in particular can be a significant portion of a loss.

4). T2 ships also have a very low mineral value, thus a low insurance payout.

5). Insurance payouts are also calculated after some market lag. Three month behind is the common figure I see tossed around.

Gevlon said...

@Xaeroflex: completely true, but completely irrelevant. If they would receive only 1 ISK, that would still be an undeserved welfare rewarding being bad.

Anonymous said...

I see insurance as an incentive to fight. Currently it's hard as it is to get people to willingly put their ships in risky situations. Go into null and you see everyone dock up if you're red rather than make attemps to fight. Wihtout insurance these would be even rarer.

Also, insurance is a big help to smaller alliances that don't have the budgets to replace ships. Without insurance it makes it that much harder for smaller alliances to appear. The ships in question are generally essentials: logistics and main battleships/BCs. One poor fight and an alliance can crumble, and its already difficult enough as it is to keep alliances from doing so.

Finally, those that really want to pvp fly in tech 2 ships, which are known as 'uninsurable' ships (you only get the insurance from an equivalent tech 1 hull), and expect to lose them, and can generally replace them.

I see it as a reasonable compromise: as pointed out, you only realistically get ~30% of the total ship value back, and also given the fact that you end up with a large number of ships you do tend to have to renew insurance on many ships (you good point about insurance needing to make a profit).

Anonymous said...

A for-profit CCP Insurance also opens up a market for player-run insurance schemes, which fits into the EVE ethos well

Hivemind said...

The insurance system is one of those underpinnings of the game that improves quality of life for the players (most of them, at least). It's never been intended to be a realistic depiction of how insurance works.

With that in mind, can you explain why the current system needs to be changed so that most players losses would no longer be covered?

Incidentally, "fair" doesn't mean "harsh, unforgiving"; the current system is fair as all players can insure ship X for cost Y and get payout Z, all constant regardless of the players. You want the system to be unfair, with different rates for different people.

Gevlon said...

@Hivemind: there is no free lunch. Someone has to pay for the money the bad players receive. If "no one" pays because the money comes from the printing works, then everyone pays by getting his wallet inflated away.

So the current system is a wealth transfer from the general public to those who lose ships (because they suck).

The current system is unfair to those who could use a real insurance. If I have 2% chance to lose my ship, I either pay the uniform 50% insurance fee (for the 60% of my ship as I get 40% for free) or fly uninsured which can leave me broke in the rare case of losing it. In the real life I could get a 3-4% fee.

The system is clearly a welfare to those who know for sure that they will lose their ship, for example the FW guys who killed the PL titan in insured dreads. They explicitly wrote that they won the ISK battle only because their ships were insured. So you and me paid for their fun.

Also, if you consider it a good "quality of life" feature, I have a much better: after spending 30 secs at the spirit healer, their ship would be resurrected!

Bobbins said...

The insurance 'welfare' allows people who need it to continue to play Eve. Where it fails is that it helps players who do not need it.
By better directing this help to the 'needy' players would help support the lower end of the player base.

PS. Pvper's are not the needy.

Hivemind said...

Well, if you insist on being facetious then: Getting their ship resurrected is only good for the player who lost it, not the trader who sells their replacement ship and fittings, the hauler who moved them to the market hubs, the industrialists who built them or the miners who supply the raw materials for them. On the other hand, insurance payments encourage players to risk ships in PvP or in other activities in more risky low and nullsec space because there's some compensation for a loss, and that ISK then feeds into all the other players I've listed involved in replacing lost ships.

The current system is fair in that it treats all players the same. What you want is one that is unfair in your favour, which says "Well Gevlon never goes looking for fights and goes out of his way to avoid fights that find him anyway, he should pay less or get more insurance than Johnny PvPer who frequently roams lowsec looking for fights and loses more ships". The thing is the current system is specifically designed to encourage players to take risks (though NOT to make risks profitable, simply to offset some of the cost of the risk), whereas the one you want encourages and rewards caution, which is what we have the rest of the game for.

On a more general level, there seem to be three common themes with the changes you've been proposing lately: First, they involve massive changes to areas of the game that you have admitted to having (and wanting) no experience of. Second, they involve either removing or changing mechanics that exist to keep the game vibrant and dynamic with both in-space action and market action going on constantly, or the adding in new mechanics that would reduce existing vibrancy and encourage stagnation. Third: They all involve changes that would harm other playstyles a lot more than they would harm your own.

Fade Toblack said...

"the current system is a wealth transfer from the general public to those who lose ships (because they suck)."

They don't necessarily suck, but we'll save that discussion for when you've actually learnt something about spaceship PvP in the game.

I'd suggest the system is working perfectly - as it's moving wealth towards the players who are playing the game as CCP intends - eg taking part in spaceship PvP and risking their stuff.

Gevlon said...

@Fade Toblack: except they DON'T risk it as they get insurance money.

@Hivemind: if you assume that taking away risks from PvP makes the game "vibrant and dynamic with both in-space action and market action going on constantly", then WoW must have the most vibrant and dynamic PvP.

I'm not trying to be jerk here, I'm fully aware that even with insurance there is loss in PvP, but if you assume that dampening risks is good, then dampening more risks is even better, hence spirit healer.

I also understand your point of the ISK moving to crafters and miners, but if you just want to throw ISK to the people, why not doing it equally: give everyone equal amount instead of giving it only to those who were looking for trouble and found it.

Fade Toblack said...

"except they DON'T risk it as they get insurance money"

I look forward to your kill and loss mails then - as if there's no risk, then there's no barrier to you taking part.

Nielas said...

The 'insurance' system is an obvious subsidy whose purpose is to encourage more PvP.

The PvPers in EVE are simply not hardcore enough to accept 100% of the risk of losing the ship. They are simply not willing to grind the required ISK and/or minerals to replace all the ships they lose in PvP. If they cannot replace the ships easily enough, they will be forced to PvP less. If they cannot PvP as much as they want to then they will quit the game and CCP does not want that.

Let's face it. PvP in EVE can be really 'carebear' since most of the PvPers simply want to pew-pew and could care less about the economic underpinnings of the game.

EVE has some complex systems in it but at the same time systems like 'insurance' are idiotically simplistic.

Hivemind said...

"they DON'T risk it as they get insurance money" vs "I'm fully aware that even with insurance there is loss in PvP". Isn't that a bit of a dichotomy?

There's a sliding scale between ease of entry and seriousness of consequences in PvP. WoW sits at one end, with the worst you can suffer normally being a minor repair bill for wear and tear on your gear. As a consequence you get players jumping in to PvP casually with no preparation. Right on the other end would be no compensation and maximum losses; the absolute maximum would be if you died you lost that character and their gear and had to start over from scratch, and in that situation there would be very little PvP purely for fun - there would have to be something very important involved for players to risk their characters permanently.

EVE occupies a point between these two extremes; in PvP there is a risk because there are consequences for your loss that you cannot mitigate, but there are things in place to soften the blow. This encourages PvP to take place without needing some grand cause to fight for, but still with planning and forethought. I'm not going to go into the exact breakdown of hull cost vs fitting prices but suffice it to say that the payout makes a lot more difference to someone who's not tried PvP but wants to give it a shot with a cheap meta0 or 1 fit than it does to someone who's feeling confident about their chances enough to use a T2 fit or fly a T2 or faction ship.

"if you just want to throw ISK to the people, why not doing it equally: give everyone equal amount" I'm honestly not sure if you're being facetious again or using a very abstract idea to refer to inflation. I'll admit printing ISK from nowhere is a problem, though insurance payouts only account for about 5% of total inflation compared to other ISK faucets, but that was never my point; it was that the current system serves a particular purpose which your suggested alternative does not.

Gevlon said...

@Hivemind: this conversation goes nowhere. We agree that the current "insurance" system is welfare for PvP-ers. You believe (philosophy, idea, not fact) that it's something good, these people deserve welfare. I believe (philosophy, idea, not fact) that they deserve nothing. No point arguing over beliefs.

Hivemind said...

That's... pretty accurate actually, yep. I did mean to include in my last comment that I would be interested in any ideas you had for improving the existing insurance system while keeping the same underlying philosophy (reducing the inflation issue, for example). I thought I'd cracked it earlier by tying whether you received a payout to your assets so you received no ISK for a loss that was trivial (say losing a T1 frigate for someone who's got billions, for an extreme example) but then I realized that it could easily be exploited by keeping assets on alt characters.

tritaniumbackbone said...

I think the big difference between the two points here is one believes it's an incentive, the other believes it's welfare.

However, the actual issue is that of the broad brush. There is no way to know how many of the PvPers are 'bad', or 'M&S'. Especially in a 100% pvp game. If you profess that most of the 'bads' are suicide gankers, they get no insurance payout. Higher tech ships give extremely small payouts compared to costs.

All the above though is of no consequence however. Insurance is not meant as welfare or incentive. It is purely a mechanic to create an isk faucet. This ensures that large scale battles still generate isk in some way. It's also the only isk faucet indexed to inflation of sorts. If prices crash, insurance crashes. I wonder if you would have the same issue with the system were it called 'Concord Ship Warranty'.

Also, you pointed out something that I think may show some naivete. 'We won the isk war!' is code for 'We got beat but need to spin it another way!'. I am quite sure giant alliances don't go after the other to make them lose ISK. When you get above battleships in size ISK becomes the secondary currency, and time becomes the primary. sure, your insurance payout may cover perhaps 40-whatever percent of a dreadnaught, but lose enough and now your alliance has to source the materials and building arrays to make another batch. Once you leave high sec for Null or even W-space, ISK becomes just another number that goes up on it's own if you need to regain security status.

Anonymous said...

EVE is NOT a real world simulation. Argueing how insurences are IRL is pointless when discussing game mechanics.

Otherwise I could claim we need perma-death of characters once killed.

Do you want perma-death in EVE?

Anonymous said...

Link to faucets and sinks of Eve:

A net 1.6T out of 28T.

A fairly minor sink in the big scheme of things.

Gentleman Johnny said...

There's another hidden welfare system to EVE insurance that's colloquially called "insurance fraud". Its actually rather gobliny and goes like this:
If at any point the cost of a ship on the market plus the cost of full insurance is less than the full insurance payout, then people will buy that ship just to self destruct. Obviously this applies only to T1 ships and Battleships are the only ones really worth the time investment to self destruct in bulk.

Corporations which control their own supply and manufacturing chains can easily create ISK out of thin air by building ships to destroy with no market required. The last time I saw this discussed, several years ago, there were several corps supplying ships at below insurance fraud prices by the freighter load for just this purpose. They sold for roughly 10% below insurance fraud level, allowing the people who did the grunt work of actually self destructing to clear a profit themselves.

The final result - CCP subsidizes ship production by keeping the price artificially high. Even if no one will buy your T1 ship, you know you can always blow it up for insurance.

Xaeroflex said...

The isk wars viability as a metric depends entirely on context of goals.

Big alliances that can fund ship replacement programs with isk from moon goo products, sure, isk isn't a primary concern in terms of their overall objectives.

Where that metric shines is in smaller conflicts like faction warfare where almost everyone funds themselves rather than relying on their corp for funds. Case in point: Rifterlings/Daggers recently killed a 3b isk Tengu in faction warfare with a bunch of frigates and destroyers. Total losses for the Minmatar were minimal compared to what was killed. Chances are good that Tengu pilot funded his ship himself (either through in-game or through plex). That kill represents a bigger morale victory for the Minmatar. Other tactics such as sniper tornado's fall under more guerilla tactics where a force may not be able to be met head on with similar isk at risk, but losses may be inflicted nonetheless that serve to demoralize the enemy and a resulting victory over their will to fight which is the overall objective in any serious war.

Hivemind said...

@ Titaniumbackbone
"Insurance is [...] purely a mechanic to create an isk faucet."
I think I and Gevlon both agree on that, though we disagree (intensely) on why this is/should be; Gevlon views it as a failiure in design in a system that should function รก la IRL insurance, rewarding careful flyers. I view it as a necessary evil to encourage new players (whether new to EVE or just to PvP) to risk their assets in PvP, and on a wider scale to risk their assets trying anything new (whether that's moving from L3 to L4 missions or moving from K-space to W-space) which scales with the conservative efforts of players (IE fitting meta0-1 to minimise cost vs fitting T2) and against the desire to maximise performance (again, fitting T2 vs low meta, and flying specialised T2 hulls vs T1).

This whole debate sparked from why this has to be a faucet; again, I accept it as a necessary evil to provide some sort of payoff, or at least loss-reduction, for PvP and to thereby encourage flow throughout the entire economy, whereas Gevlon views it as a penalty for 'good' (by his definition) players for the failiues of 'bad' (again, his definition) players.

Having made that clarification, I think we're both interested in why it has to be an ISK faucet to achieve anything; as you said it becomes pretty trivial as players start to feel comfortable committing more expensive ships to the field, whether that field is hisec mining or missioning or lowsec roams or nullsec sov fights, so (this time it's just me asking from my perspective) is it necessary for it to be an ISK faucet? If it's not universally essential, which areas is it essential for and how can we narrow it down to only pay out for those areas, or otherwise to scale the payout based on the need of the payees?

Side note for the various people saying "It's only a slight contributor to inflation" or similar: Yes, but why does it need to be a contributor at all? Is there no way we can keep the good parts (encouraging PvP to keep the economy flowing) without the bad parts (printing ISK from nothing)?

Fade Toblack said...

To point out something that's not been mentioned all the time. At the end of the day the PvPer that loses ships all the time, will go out with their insurance money and buy a new ship off the market.

Many of these are the players that just buy stuff at whatever price off the market, rather than put up buy orders to get stuff at best-prices - eg the ones that Goblin's like Gevlon can make all their ISK from. It's widely regarded that PvP is what keeps the Eve economy spinning - if you reduce the amount of PvP you slow the economy, which meas that the industrialists make less ISK.

(Certainly I make much more ISK through industrial activities in times of large-scale warfare than I do now.)

Gentleman Johnny said...

In a way this is my issue with insurance fraud. CCP has in essence promised to buy each and every ship for a set value (full insurance payout less full insurance premium). That's both an ISK fountain and a resource sink that warps the entire market, driving up the prices of both T1 ships and the resources used to make them in addition to adding ISK to the economy.

Any time those resources dip lower, someone or some large operation will self destruct them until the value rises. At $4T per month out and $1T per month in premiums, this is probably how the majority of insurance money hits the market, not newbs getting their free 40% buyback.

If anything this hurts PVP newbs more than 40% helps them because the cost of their ships and any parts used to make T1 ships can never fall below that point. On the other hand, it DOES help industrialists. The industrialist knows that the Apoc will never be worth less than $110M and is thus the primary recipient of this welfare.

Anonymous said...

@Fade Toblack

Not necessarily. I believe that after some time, people would by enlarge stop random ganking and instead be very selective and tactical about their PvP and dont pick up fights just for the sake of it. Sure a lot of would stop PvP altogether but what would we be left was a solid thinking playerbase who picks up fight over things that are worth it... perhaps not the most casual friendly approach but definitely worthwhile game when it comes to risk:reward ratio.

Anonymous said...

You could add risk premiums to insurance to encourage people trying new things - this would also discourage insurance fraud. (I wonder - has anyone ever artificially inflated the price of a worthless/unpopular ship just for the the insurance fraud?)

It might be nice to add a mercenary bond or somesuch - where damage/loss of a ship would be covered by the NPC or corporation hiring you.