Insurance is a safety measure designed to offer more protection to lenders in the event of a default.
Each borrower pool has an insurance account. On every block, a governance approved percentage of the pool's interest is diverted to the insurance account. Initially this amount will be set by the Clearpool Core Team but this can be modified via governance in the future.
In the event of a default, insurance can be claimed by the pool's cpToken holders (lenders), following an auction process, which is designed to maximize the total claimable amount for lenders (see Default for more information).
When a pool is closed, the insurance amount is transferred to protocol revenue, which is subsequently used for CPOOL buybacks. Please see Revenue for more information.
The current approved parameter for insurance is: 5%