Igloo Apply Blockchain for Insurtech Services in Agriculture

Startups insurtech Igloo released a Weather Index based Insurance product blockchain for rice farmers who have not been served by insurance. this insurance utilise Smart contract which can automate claims based on the level of rainfall that occurs.

Index Insurance is a new approach to addressing the risk of loss to farmers due to natural disasters or uncertain weather using predetermined weather index data. In Indonesia, erratic weather conditions are often an obstacle for farmers. This initiative has actually been expressed by companies that want to expand protection solutions to more sectors through initiatives such as DeFi (Decentralized Finance).

Data from the Department of Agriculture, Food Crops and Horticulture of South Sumatra shows that the province, as the 4th largest rice producing region in Indonesia, has experienced a decline in rice yields of up to 1,7 million tonnes in 2021. The reason for this is the changing weather patterns. until the flood occurred which inundated the agricultural area.

Igloo Co-founder & CEO Raunak Mehta said, Weather Index Insurance that is presented can reduce farmers' risks due to bad weather conditions and harm them. This product offers a faster, simpler, objective claim settlement process, and helps provide payment processes based on events that occur and official metrics that are accessible to the public.

"Hopefully this insurance can make it easier for farmers to get access to insurance at premium prices that are much more affordable," he said in an official statement.

New to Vietnam

Weather Index Insurance uses rainfall data from Vietnam Meteorological and Hydrological Administration (VNMHA) and monitored by Igloo, this parametric insurance will pay losses based on predetermined calculations due to weather or natural disasters. In addition, farmers can easily and quickly submit claims without the need to carry out individual verification so that transaction costs are more affordable.

The blockchain-based claim payment arrangements provided are also able to increase transparency and consistency so as to create a credible system. According to Mehta, the unprecedented level of climate change, coupled with the downturn in the supply chain due to COVID-19, has driven the need for agricultural insurance solutions for small farming communities.

Therefore, his party seeks to provide an integrated approach to the wider ecosystem to strengthen the level of farmer resilience that focuses on product innovation and distribution. “The launch of the first blockchain-based Weather Index Insurance has strengthened our commitment to making insurance more accessible and affordable through technology,” he added.

As a first step, Weather Index Insurance has covered more than 5.000 hectares of land in Vietnam and is targeted to protect 50.000 hectares in the next few seasons through cooperation with a number of state-owned and private companies.

Vietnam is one of the five largest rice exporting countries in the world, with 95% of exports coming from the Mekong Delta region. However, food production cannot be separated from the challenges of unfavorable climatic conditions, such as floods and changes in rainfall patterns which can reduce the production of rice farmers.

Mehta continued, in the future Igloo will expand Weather Index insurance solutions in Southeast Asia, including Indonesia, as the 3rd largest rice producing country in the world. It is hoped that the high risk due to weather changes and uncertain climate can be resolved with the Weather Index Insurance solution and protecting farmers from financial vulnerability to replant.

Achievement

It is claimed, until now Igloo has facilitated more than 300 million policies in Southeast Asia and plans to expand protection solutions to sectors that have not been served by insurance by utilizing sophisticated technology. Igloo's strong business potential lies in the growth of the digital economy in Southeast Asia which is estimated to reach USD 300 billion by 2025.

Igloo itself is based in Singapore with offices spread across Indonesia, Thailand, the Philippines, Vietnam, Malaysia with technology centers in India and China. In previous data, it was claimed that Igloo scored an increase gross written premium (GWP) will triple by 2021.

The company has more than 30 major partnerships and a growing regional footprint. Igloo's ambition is to facilitate five percent of General Insurance Premiums for the next five years in this region. To realize this ambition in March 2022, the company announced a $19 million Series B round led by Cathay Innovation with participation from previous investors, including Openspace. This funding brings the company's total funding to more than $36 million.

The series of innovations carried out by the company are launching an AI-based platform, Ignite, to increase the productivity of insurance and sales agent partners, as well as speed up the sales process to make it simpler and more efficient. Ignite offers a variety of insurance products on one platform, ranging from motorcycle and personal accident insurance provided by partnered insurance companies. It is stated that there are more than 1000 agent partners who have utilized this platform.

Prior to launching Ignite, Igloo also offered embedded insurance in Indonesia in collaboration with various partners, such as RedDoorz which offered Guest Protection, DANA digital financial services which offered Gadget and Gamer's Health Protection, as well as corporate Famous e-commerce Bukalapak which offers six products such as transit, electronics, goods protection and others.