Aon plc, the leading global professional services firm providing a broad range of risk, retirement and health solutions; Oxfam in Sri Lanka, an organization working to alleviate poverty; and Etherisc, a leading InsureTech company, today announced a joint program to deliver micro-insurance to thousands of small holder paddy field farmers in Sri Lanka through blockchain technology.
“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 Europe, Middle East and Africa, 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.”
Oxfam has been supporting the delivery of affordable agricultural insurance to Sri Lankan small holder farmers for several years. With Aon and Etherisc, the program will now utilize blockchain technology to power efficiency and transparency and be expanded to allow for greater access.
A major barrier to entry for farmers is a lack of affordable and reliable insurance products, and understanding about how insurance will help them survive and when it will pay out. By leveraging blockchain technology it is intended to automate parametric insurance products, transforming and simplifying the claims process to the point that the farmer would not need to submit a claim and the insurer would not need to send a claims adjuster in the field.
Michiel Berende, Inclusive Insurance Lead, Etherisc added, “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.”
This project is designed to offer Oxfam in Sri Lanka and their local partners, a completely automated index insurance product, which should provide low-cost agriculture insurance, with a higher percent of premiums being used for claims payment and immediate pay-out.
Bojan Kolundzija, Country Director, Oxfam, added, “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.”