Re/insurance broker Aon is collaborating with Oxfam and InsurTech firm Etherisc on a joint program to deliver micro-insurance to small holder paddy field farmers in Sri Lanka using blockchain technology.
The parties plan to leverage blockchain to automate parametric insurance products, which will simplify the claims process and remove the need for farmers to submit claims and for insurers to send claims adjusters.
“By bringing micro-insurance, with very small premiums, to the hard working paddy field rice farmers, we are empowering economic and human possibility,” said Hugo Wegbrans, Chief Broking Officer for Europe, Middle East and Africa at Aon.
“This is not about making traditional insurance smaller, this is about empowering farmers to manage risk in order to thrive and helping them to recover when they face adversity,” Wegbrans continued.
Michiel Berende, Inclusive Insurance Lead at Etherisc, also commented: “For low income households a loss event is a particularly delicate and difficult time, and they need a claims process that is fast, simple and clearly understood.
“With blockchain technology a payment can be made immediately, eliminating the need, in some circumstances, for farmers without access to traditional regulated loan facilities to go to a moneylender or loan shark. Payment triggers will be mutually agreed upon and monitored by external data providers where blockchain makes that data more secure and reliable.”
Oxfam has been supporting the delivery of affordable agricultural insurance to Sri Lankan small holder farmers for several years, and cites a lack of available insurance products and understanding about its benefits as major barriers to entry for farmers.
The new collaborative project is designed to offer Oxfam in Sri Lanka and their local partners a completely automated index insurance product, providing low-cost agriculture insurance, with a higher percent of premiums being used for claims payment and immediate pay-out.
Bojan Kolundzija, Country Director for Oxfam, stated. “We have been able to establish a solid base to support farmers in Sri Lanka. We have been educating the farmers, building trust and creating lasting solutions. This advancement, is significant as we are now able to expand our reach by applying the latest technology available, which should also allow us to deliver more real and lasting results.”