REF: APPENDIX_B // ACTUARIAL_GUIDANCE
ACTUARIAL GUIDANCE
Minnesota Department of Commerce Guidance Note: 2025-01
Authority: Minn. Stat. § 325M.05, Subd. 5
THE SOLVENCY FORMULA
MCR = max(B_min, Σ(V_i × W_i × λ_rev) + K_tail)
Statutory Floor ($50,000)
Volume of active credentials in Class i
Risk Weight for Credential Class i
Revocation Latency Multiplier
Tail Risk Add-on (quadratic surge pricing)
RISK WEIGHTS (W_i)
| CLASS | TYPE | DESCRIPTION | WEIGHT |
|---|---|---|---|
| A | Access/Non-Financial | Gym, library, age verification | $0.50 |
| B | Compliance/Status | Licenses, employment, degrees | $50.00 |
| C | Financial Authority | Accredited investor, POA, signatory | $5,000.00 |
| D-1 | Agentic (Info) | AI posting content, chat, non-financial facts | $250.00 |
| D-2 | Agentic (Fiscal) | AI signing transactions, authorizing payments | $5,000.00 |
Note: Class D-2 = Class C. "If you give a bot a wallet, you bond it like a banker."
REVOCATION LATENCY MULTIPLIER (λ_rev)
| STATUS CHECK FREQUENCY | MULTIPLIER |
|---|---|
| Real-Time (Per Presentation) | 1.00 |
| Daily | 1.10 |
| Weekly | 1.50 |
| Perpetual (No Expiry) | 5.00 |
The 5x zombie credential penalty economically kills perpetual credentials. Forces adoption of real-time status lists without mandating technology.
FLASH CRASH SURGE FORMULA
If velocity > 1,000 credentials/hour:
K_tail = $1.00 × ((v - 1,000)² / 100)
• At 10,000 credentials/hour: K_tail = $810,000
• Hard limit: 100,000 credentials/hour → automatic suspension
This isn't a fine—it's a gradient. The curve stays flat for normal operations but goes vertical for runaway loops, creating an economic kill switch that forces rate limits at the firmware level.
ACCEPTABLE COLLATERAL
| TIER | ASSET | RECOGNIZED VALUE |
|---|---|---|
| 1 | USD Cash, T-Bills (<1yr) | 100% |
| 2 | AA+ Corp Bonds, Munis | 90% |
| 3 | S&P 500 Equities, Gold | 70% |
| 4 | BTC, ETH only | 50% |
| 5 | Governance tokens, NFTs | 0% |
PUBLIC OPTION & TRIGGER EVENTS
Public Option Pricing
Premium = (MCR × 0.05) + AdminFee
5% annual premium ensures state only insures the "lemon" market.
Trigger Events
- • Acknowledged breach
- • Administrative finding (preponderance standard)
- • Insolvency default
PAY FIRST, SUE LATER
Surety pays to Consumer Restitution Fund within 14 days of administrative finding. Litigation happens over the State's money, not the victim's.