The Neptune Mutual protocol doesn't know about events happening in the real world.
To correctly establish the fact of a cover incident, the NPM tokenholders participate in a consensus system known as reporting. A reporter is the first person to report an incident; a candidate reporter is the first person to disagree with the reporter. The NPM tokenholders can support the reporter by submitting attestations or the candidate reporter by submitting refutations.
The consensus rule for each cover product has a reporting period that begins as soon as a report is submitted. To participate in the reporting system, tokenholders must stake their tokens.
A decision, or resolution, is made at the end of a reporting period. If the resolution is in favor of the reporter, policyholders can submit claims. As opposed to existing discretionary cover protocols on Ethereum, Neptune Mutual policyholders receive claims payouts immediately without having to wait, provide proof of loss, or undergo a special membership process.
As a result of the resolution, the invalid camp loses all its tokens. Some will be burned while others will be awarded to the valid camp.