Etherisc, Aon and Oxfam in Sri Lanka on a Mission: to Expand Inclusive Insurance in Sri Lanka
Etherisc made headlines in recent weeks after partnering with leading global professional service firm Aon and non-profit group Oxfam to bring inclusive crop insurance to thousands of smallholder paddy field farmers in Sri Lanka.
Etherisc on the field
Less than 7 percent out of a 21 million population in Sri Lanka has any form of insurance (accident, life, health, property or agriculture). The figures go well under one digit in the agriculture sector, where only 11,000 farmers are covered even though the sector employs around a third of the workforce and accounts for almost 20 percent of the economy, according to official data.
With this conditions, Sri Lanka is a perfect candidate to feel the benefits of decentralized, collaborative and automated insurance, especially in the farming sector, where hundreds of thousands of small producers are increasingly exposed to climate change risks.
Cooperation and result-oriented innovation
The partnership, announced at the “Blockchain for Social Good” event in London by Etheric’s Inclusive Insurance leader Michiel Berende, is an example of multidisciplinary cooperation to address complex real-world problems. Oxfam provides the first-hand experience in the farmer-community, Aon lends its knowledge in the (re)insurance market and in developing insurance propositions, while Etherisc brings its blockchain and decentralized risk-pools expertise.
The project background is also an interesting case of how blockchain can be used to improve current processes and avoid having to start building solutions from scratch. We believe the disruption is in the results, not in the players, the tech or the process.
In this case, blockchain has a great potential for enabling insurance for smallholder farmers, a largely untapped niche because of its great challenges, from accessing remotes farmers areas with no banking access to deal with costly red tape and liquidity constraints.
Improving trust and efficiency
Oxfam has been successfully working with the private sector on agricultural weather index insurance in Sri Lanka for farming communities at risk of losing crops due to extreme weather. The project with Etherisc and Aon aims to build on the current system with a blockchain-based process workflow to create efficiencies, develop trust across the value chain and deliver a scalable platform to support a larger insured base.
Using a weather data index as a trigger for smart contracts, we can automate a lot of cumbersome tasks in the laborious insurance claim process, making the compensation process more effective and affordable. This is especially relevant when working with insurance for smallholder farmers, as sometimes the cost of processing a claim can sometimes surpass the claimed amount.
“We are looking at how blockchain can lower costs and increase efficiencies and make it easier for many more farmers to get access to this product,“ Michiel Berende said.
Empowering human possibility
During the following months, we will be assessing the existing setup and working alongside Oxfam with a group of 3,000 farmers to show how our technology can improve the current process insurance products.
The partnership common goal is to design a completely automated weather index insurance product that should provide low-cost agriculture insurance, with a higher percentage of premiums being used for claims payment and immediate pay-out.
In the longer term, we hope will be able to impact as many as 800,000 farmers in Sri Lanka and expand our experience to other countries.
In the words of our Aon partner in a statement:
“By bringing micro-insurance, with very small premiums, to the hard working paddy field rice farmers, we are empowering economic and human possibility.”