The blockchain solution was tested as a part of OiSL inclusive insurance project
Oxfam in Sri Lanka, the organization working to alleviate poverty; Etherisc, the InsurTech startup developing a protocol for decentralized insurance applications; and Aon plc, the leading global professional services firm providing a broad range of risk, retirement, and health solutions, today announced the success of the first season of their blockchain-based delivery of microinsurance to smallholder paddy field farmers in Sri Lanka.
After the coordinated launch earlier this year with 200 farmers enrolled who are at risk of losing their crops due to extreme weather, the system made pay-outs to farmers in this initial operations phase. The companies will now move forward by seeking solutions to some of the challenges identified in the next phase of the project as cropping season starts in November. The main goals of this follow-on phase are to refine the system’s efficiency and scale the number of farmers who will benefit from the microinsurance.
“We are proud to have real-world, on-the-ground success from a blockchain solution for microinsurance,” Michiel Berende, the Chief Inclusive Officer at Etherisc, said. “We are delighted with the first phase results and we are excited to drive on and help more farmers.”
This coordinated effort includes Oxfam in Sri Lanka (OiSL), which has long-standing expertise in agriculture, deep engagement with the local farmer-community, and an understanding of the important role of agricultural insurance. The blockchain solution was tested as a part of OiSL inclusive insurance project. Oxfam in Sri Lanka’s efforts are amplified by Aon’s expertise in reinsurance and global insights, as well as Etherisc’s knowledge in applying blockchain technology to insurance. Sanasa Insurance, Oxfam in Sri Lanka’s partner, also joined the initiative to provide local expertise, networks, and operational execution.
Historically, there were major barriers preventing farmers from utilizing insurance, including the lack of affordable and reliable insurance products, a lack of understanding about how insurance would help a farmer survive, and when and how a claim would be paid. This new blockchain technology directly addresses those issues as the insurance process includes automation. This can transform and simplify the claims process so that a farmer does not need to submit a claim and, at the same time, the insurer does not need to send a claims adjuster into the field. In addition, this process results in reduced administration costs and, subsequently, a higher percent of premiums being used for claims payment and immediate, fully trusted pay-out.
In the first season, the group identified several challenges in the field to be improved on going forward. First, many farmers in the area lack electronic devices and Internet access, meaning the project may look to provide offline solutions and devices through local insurance support from Sanasa to facilitate registration in the group policy. Second, the project may seek to build a network of additional data sources to round out the automated data provided by weather stations. Third, farmers commonly manage transactions with cash or cheques only, which inhibits the process of automated payouts, requiring research of mobile payment options in Sri Lanka.
The projects members will all gather at the Decentralized Insurance Conference in Malta on November 5–6 to detail the results of the first season and outline the pathways forward for an enhanced project in its second phase.
Source: Company Press Release