Igloo Introduces Blockchain-based Weather Index Insurance To ‘Ease Agriculture Pain’
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Editing by Nathaniel Cajuday
Citing the fact that the Philippines suffers millions of dollars in agricultural losses each year as a result of the country’s typhoon-prone location, insure-tech firm Igloo suggested that blockchain-based insurance could help farmers overcome the financial difficulties they face when their crops are hit by a typhoon.
Along with this, Igloo announced that it has launched its Weather Index Insurance, the firm’s first blockchain-based parametric insurance that automates claims through a smart contract on the blockchain.
“Farmer productivity has declined over the years due to insufficient support. Often, families of farmers decide to sell land for more immediate income amid pressing needs, and what would have been the next generation of farmers are seen to pursue better-paying jobs,” shared Mario Berta, Country Manager for the Philippines at Igloo.
Accordingly, Igloo also noted that these farmers, especially the small-scale ones, are the foundation of one of the major industries in the Philippine economy, agriculture.
“With limited financial means, farmers heavily rely on loans to raise capital for their work. This situation makes them vulnerable when they lose income when crops are destroyed by floods and droughts. With their initial mortgage unpaid, farmers often raise capital through fresh loans, exposing them to a high risk of debt accumulation,” Igloo explained in a statement, emphasizing that despite being the major contributors to the industry, most of these farmers live in poverty, and with the occurrence of typhoons and other extreme weather events, they are left with even less than their capital.
Berta also expressed that, with the Philippines being actively visited by natural calamities, farmers really need a shoulder to lean on:
“On top of these challenges, there are recurring natural disasters that significantly hurt the livelihoods of farmers. This calls for a strengthened initiative that will mitigate the impact of catastrophes.”
Moreover, Igloo stressed that although “extreme weather conditions may not be prevented, preparations can be made to ensure the fastest recovery for the agriculture sector.”
The insure-tech firm then stated that crop insurance may be beneficial and allow farmers to restart farming after a disaster. Despite already having crop insurance, the current process farmers have to go through takes a lot of time and requires tedious backend processing. Agents will also have to physically visit farms in the wake of typhoons and manually assess the damage to the insured’s assets, which drastically extends the processing time—and eventually adds to further loss of income for the farmers.
“Crop insurance needs to be automated so the farmers can receive their payouts sooner and get back on their feet quicker,” the Country Manager concluded.
What is Weather Index Insurance?
According to Igloo, Weather Index Insurance is an innovative approach to insurance provision that pays out benefits based on a predetermined index for losses of assets and investments resulting from weather and catastrophic events.
With its blockchain-based contract, the claim is automatically paid when the rain index hits the flood or drought threshold, which eliminates the aforementioned problem of a long process and the need to individually verify claims.
“We believe that Weather Index Insurance is a potential product that will reduce the vulnerability of farmers to adverse weather conditions. The expected increase in the speed of claims processing will enable farmers to have a better chance of recovery from catastrophes and increase productivity and competitiveness,” added Berta, clarifying that as the business rules governing claim payout are hosted on a public blockchain, the transactions also feature transparency, consistency, and unbiasedness.
Currently, Weather Index Insurance is available in Vietnam but is set to roll out in more agriculture-driven SEA countries like the Philippines, Indonesia, and Thailand.
According to Igloo, it is currently speaking to potential partners that can underwrite and distribute the product to underserved farmers in Luzon, Visayas, and Mindanao, noting that it “welcomes more collaboration with the public and private sector to guarantee the highest level of national protection.”
Meanwhile, aside from opening its doors to both public and private entities, the firm recognized that there are still other challenges that need to be addressed to make blockchain-based insurance palatable to farmers, such as the country’s low insurance penetration rate, financial inclusion, and access to digital services in rural areas, among others.
“When we bring Weather Index Insurance to the Philippines, Igloo will work with organizations such as rural banks, farmer’s cooperatives, and relevant government agencies to address these pain points and ensure that the insurance solution becomes a viable option that farmers can rely on for faster recovery,” the Country Manager explained.
What is Igloo?
Igloo is a regional insure-tech firm aiming to make insurance accessible and affordable for all through technology. The firm facilitates digital insurance underwritten by partner insurance companies and offered through partner distribution channels such as e-commerce platforms and mobile wallets.
The firm also leverages big data, real-time risk assessment, and end-to-end automated claims management to create B2B2C insurance solutions for platform companies and insurance companies.
Igloo’s insurance solutions aim to enable companies to eliminate their exposure to operational risk, create new revenue streams, and optimize and enhance existing products and services. Igloo has partnered with over 55 well-known brand names across the markets in various verticals, including insurance, telecommunications, e-commerce, hospitality, health tech, and financial services.
Last year, Igloo collaborated with mobile e-wallet Gcash to launch the first of its-kind online shopping insurance protection. In a webinar, last June, Neil Trinidad, Gcash’s Vice President and Head of InsureTech and Crypto, stated that blockchain technology has a lot of potential uses in the insurance industry. (Read more: GCash Partners with Igloo for Online Shopping Protection Insurance)
This article is published on BitPinas: Igloo Introduces Blockchain-based Weather Index Insurance To ‘Ease Agriculture Pain’
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