Parametric Crop Insurance
Crop insurance processes are costly for all stakeholders and unequipped to face increasingly frequent and unpredictable agricultural losses.
Context & Challenges
In the event of a natural disaster or a loss of 30% or more of crop value, insurance companies must verify, and adjust claims before paying them out. The process is lengthy and convoluted, beginning with sending a crop adjuster to inspect damage and analyze relevant data. During this time, farmers cannot replant new crops but must wait for their payouts, often resulting in significant losses for the farm.
Agricultural losses are generally regionally targeted, severe, and statistically more common than other losses, meaning that insurance companies often must respond to many claims at once, increasing the friction already inherent to the process.
Yet, farmers increasingly rely on crop insurance in the face of growing climate unpredictability. Crop insurance is a necessary component of the agricultural supply chain, and therefore it’s of benefit to all stakeholders that the process is streamlined.
The below data demonstrates the importance and breadth of the crop insurance industry, taking New York state as a case study. In 2019 in New York –
- Crop insurance protected 1.1 million acres providing $560.8 million in liability protection
- Farmers paid $19.6 million for this insurance coverage
- Crop insurers paid $70.6 million to cover crop losses in 2019
Despite the relevance to the industry, crop insurance today holds challenges for all stakeholders.
Lengthy payout delays lead to planting and harvesting delays, causing farmers to produce smaller yields and incur a myriad costs.
- Insurance Providers
The bulky and labor-heavy administrative process creates inefficiencies for insurance providers, inherently driving cost and waste.
- Government Bodies
Government bodies like the USDA are responsible for the subsidies which enable crop insurance payouts, meaning that inefficiencies in the crop insurance process inherently create challenges for the government.
If farmers are not able to meet projected yields due to insurance delays, consumers are inherently affected.
The Good News
The good news is that our STRATO product has the ability to resolve many of these inefficiencies, building productivity and financial relief for both crop insurance companies and farmers.
- For insurance companies, STRATO eliminates a large portion of the work involved in verifying and adjusting claims, allowing insurers to use their time more efficiently and cost-effectively.
- For farmers, this results in payouts in the immediate aftermath of an event such as a natural disaster, enabling immediate replanting and the corresponding financial gain. STRATO facilitates this by including certain events as automatic triggers of related payouts in the smart contracts.
In other words, STRATO facilitates parametric or index insurance, which have otherwise been too complicated to actualize efficiently and effectively. Our platform also incorporates intelligent predictions into the smart contracts to pre-empt events and build proactivity into the industry.
- Automate most or all parts of parametric insurance
- Implant a policy’s logic in a smart contract and automatically trigger execution in the case of a predefined loss event
- Settle and verify all transactions without manual intervention
- Streamline crop insurance processes
Any STRATO insurance solution leverages STRATO’s enterprise grade features
- RESTful APIs for direct connection of relevant IoT devices to the blockchain network
- Identity Management, OAuth and SSO capabilities for simplified IoT authorization and user login
- Privacy via private chains to keep any competitive/operations data private
- Enterprise Data Modeling for integration of existing and future insurance models