Updated: Jul 4, 2022
Did you know? In developing countries, only 20% of the farmers have access to agricultural insurance coverage, and in sub-Saharan Africa this falls down further to just 3%!?
To add to this, climate vulnerability of crops is on the rise and unfortunately, traditional insurance is no good. It’s expensive and there is little trust in the insurers due to histories of delayed or absent payouts. Result? It’s a breeding ground for the startups to innovate and disrupt.
Sprout Insure, based out of sub-Saharan Africa, has devised a blockchain based climate risk crop insurance scheme wherein crop insurance policies are plugged into smart contracts on a blockchain and indexed to the local weather.
The process goes like this: Based on predictive data analysis of the weather the insurance premium is fixed for each type of crop. Next, a smart contract is entered into with the farmer that is saved in the blockchain where the payouts are automated by plugging them to the actual weather data. That’s all.
So, say for eg. to grow rice an area needs at least 100-120cm of rainfall and in a particular crop cycle only 80cm of rainfall is recorded, naturally the crop yield will suffer, affecting the income of the farmers. Now in ordinary circumstances he/she would claim insurance by filing papers and doing the rounds to the office. With a blockchain linked insurance scheme, an auto payout is triggered because of reduced rainfall being recorded. Since the contract is on blockchain, no one can really change it until the farmer himself gives the consent to.
Farmers’ access to Crop Insurance and timely settlement of claims is a problem in India as well. Can the same idea solve this problem here in India?
This article is a part of August'21 edition of our Startup Newsletter. Here's the complete publication: