[wiwillia]

Unfortunately this wouldn't really work. If you're selling insurance, you're going to have a strong incentive to play it safe. If you run a business, you're going to be furious if legitimate customers are rejected (which is unavoidable at some level, but no matter what level that is you're going to make the business furious when they discover a legitimate charge being rejected).

[justinsb]

I wasn't thinking about outright rejecting any charge, but rather that you would price some charges more expensively than others. As a seller of insurance, you're going to price above your estimated percentage, to give you some profit and compensation for the risk, but if you price too high you have no revenue.

It also becomes a much more interesting market if there are multiple competing providers of insurance that bid against each other (just as ad networks work, for example).

As a buyer of insurance, I would always have the choice to not buy the contract and take on the risk myself.

If the market works (which is a big if), it should become an efficient transfer of risk to companies that are experts in evaluating it.

Very interested to hear more of your thoughts though, as you're obviously part of the target audience at your dayjob!

[Artemis2]

There is a new, quite stealthy startup that does this (not sure if I can give away their name when their website doesn't say what they actually do). They guarantee every payment they accept against fraud.

The tradeoffs are pretty obvious to merchants when they compare their authorization rates between processors and look at the revenue the lose, either through fraud or through false positives.

[mhluongo]

I think a different model could align incentive while still providing the same service. Maybe "We get X% in payment processing that's not charged back" or similar.