Ok, first post from a newb, I'll keep it short -
1. DRO's remain fair priced through fair market competition.
2. DRO's dispense punishment to their insurees in accordance to the policies that the insurees have agreed to.
3. In return for this agreement the the community can trust the insuree in business transactions and the like, knowing that he has the DRO to record his social interactions.
4. Competition keeps the DRO's fair priced, but like all companies that offer services mergers are inevitable, buy outs will happen, personal information will be shared, and eventually the competitve market will stagnate as a handful of super DRO's are left to manage the world population. Even before this would happen a cut throat DRO may attempt #5 below.
5. The DRO's will need better products to entice customers, and in the case of the DRO their product improvement would be simply to lower the scale of punishment for any given crime against society. Hmm.. "I can pay for the same coverage but I'll only get a year in prison for drunk driving instead of 5, sign me up."
6. So now the other DRO's have to follow suit, and before you know it there are virtually no punishments for any crime.
7. Crimes increase, the DRO's lose value as a measure of rating for civil behavior, merchants don't bother to check for DRO status because they have lost credibilty and boom, society crumbles.
I understand that the counter argument would be that before #6 merchants would stop accepting business from holders of sketchy DRO polocies, but the one human constant that destroys all societies based on anarchy is greed.The merchants will need business to make a living, and should #6 follow #5, the may not have many options on the customers they deal with. Should they stop servicing buyers, they risk losing customers to shops that simply don't care.
So what recourse would the other DRO's take?
1. The DRO's that do not lower punishments may inact policies that punish their insurees for dealing with DRO policy holders of the "bad" DRO's. This can only lead to one thing - division.
2. The society divides based on DRO's. Ultimately the population may then geographically seperate based on where the majority of friendly businesses are, cross area trading becomes necessary, the DRO's allow is but inact policy premiums, and viola! Trade Tax is born!
Just a thought, one of many on how DRO's could not possibly work. Don't get me started on private security force skirmishes or the horrible event that a DRO establishes itself as one that uses a religion to guide it's policies.... OMG! (lol...)