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Igloo launches blockchain-based weather index insurance for rice farmers

Regional InsurTech Igloo, in partnership with non-life insurance leader PVI Insurance, Vietnam Meteorological and Hydrological Administration (VNMHA) and global reinsurer SCOR, has launched Vietnam's first weather index insurance -? a blockchain-based parametric product that automates insurance claims of rice farmers.

Vietnam is among the top five rice exporters in the world, with 95% of its exports produced in the Mekong Delta region. However, food production is challenged by severe climate conditions such as floods and shifting rainfall patterns that lead to loss of yield for paddy farmers. It is estimated that a 1% increase in insurance penetration helps reduce disaster recovery expenditure by almost 22%. Agri-insurance product development and distribution is impacted by low awareness amongst the farming community, challenging distribution economics and regulatory frameworks.

Considering the above challenges and the opportunities at stake, Igloo with its end-to-end InsurTech capability has tried to create the most optimal value chain supported by ecosystem enablers to deliver agri-insurance at scale. With underwriting support from PVI & SCOR, Igloo utilized blockchain technology to develop a Weather Index Insurance that automates claims through the use of smart contracts. At an affordable premium starting from $8/hectare, with a minimum coverage area of 0.1 hectare, the product protects farmers against irregular rainfall distribution.

With rainfall data collected from VNMHA and monitored by Igloo, the parametric insurance will pay out claims calculated using pre-assigned values for losses due to weather events or natural calamities. It will also eliminate the need to individually verify claims thereby reducing transaction costs and enabling faster payouts to farmers. The business rules governing claims payout being hosted on a public blockchain help leverage the attributes of transparency, consistency and unbiasedness thereby making the setup credible.

Acreage covered to be expanded

Tri Nguyen, Igloo's country manager for Vietnam, said, “Having covered more than 5,000 hectares, we are targeting to cover 50,000 hectares over the next couple of seasons in collaboration with public-private enterprises.” In the current phase, the insurance plan offers automated claims in eight provinces in the Mekong Delta region in South Vietnam.

The insurance is underwritten by PVI Insurance, Vietnam’s top general insurer, and is currently distributed via Igloo’s intermediary services platform —? Ignite. SCOR is the reinsurer partner having demonstrated a pedigree in financial and technical capacity for weather-based insurance products around the world.

Raunak Mehta, co-founder and CEO of Igloo, said, “Given its high potential for scalability, we look forward to expanding this insurance solution to cover more agricultural communities and take it to other parts of Southeast Asia in the near future.”

Igloo is the first full-stack InsurTech firm to emerge from Singapore. It has offices in Singapore, Indonesia, Thailand, The Philippines, Vietnam and Malaysia and tech centres in India and China.



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