If you don't have enough capital to take a few hits, don't start any kind of insurance company. If you do have the money, though, it should be the same basic pr

If you don't have enough capital to take a few hits, don't start any kind of insurance company. If you do have the money, though, it should be the same basic principle as any other insurance company: calculate the risk as best you can, and charge accordingly so that the expected value of your profit is as positive as the market will bear.