- Igloo utilizes blockchain-based smart contracts to facilitate Vietnam’s first Weather Index Insurance that automates insurance claims for paddy farmers
- Smart contracts also harmonize farmers’ data, policy information, and payment data to reduce the cost of issuing new policies and eventually decrease premium fees of paddy farmers
- Offers coverage for shortfall and excessive rainfall in Mekong Delta region in South Vietnam in the current phase, to expand to more areas going forward
SINGAPORE, 1 November 2022 – Regional insurtech Igloo, in partnership with PVI Insurance, Vietnam Meteorological and Hydrological Administration (VNMHA) and international reinsurer SCOR, today announced the launch of the country’s first Weather Index Insurance – a blockchain-based parametric Index Insurance product that automates insurance claims of rice farmers.
Vietnam is among the top five rice exporters in the world, with 95% of its exports coming from 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%. While insurance can hedge against inclement weather, it is expensive. 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 opportunity 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.
“Our Weather Index Insurance product reduces the vulnerability of rice farmers to adverse weather conditions,” shared Tri Nguyen, Country Manager for Vietnam at Igloo. “It allows a quicker, simpler and more objective claims settlement process and helps provide peace of mind and ease to our farmers as payouts will now be based on triggered events and publicly accessible official metrics. Having covered more than 5000 hectares we are targeting to cover 50,000 hectares over the next couple of seasons in collaboration with public-private enterprises”
The insurance is underwritten by PVI Insurance, Vietnam’s top General Insurance firm, and is currently distributed via Igloo’s intermediary services platform – Ignite. International reinsurer SCOR is the reinsurer partner having demonstrated a pedigree in financial and technical capacity for weather based insurance products around the world. In the current phase, the insurance plan offers automated claims in 8 provinces in the Mekong Delta region in South Vietnam.
Prior to launching Weather Index Insurance, Igloo in Vietnam has successfully worked through an embedded insurance model with partners like fastest-growing one-hour-delivery e-commerce platform Loship, on-demand delivery platform AhaMove, and high-tech financial services company, LOTTE Finance. Igloo also launched Ignite by Igloo, an AI-powered platform, to enhance sellers’ productivity through a smoother and more efficient sales process.
To date, the insurtech firm has facilitated over 300 million policies across the region and aims to extend protection solutions to more underserved sectors in the region, leveraging state of the art technology. Igloo’s strong business potential lies in Southeast Asia’s growing digital economy, which is expected to hit US$300 billion in 2025. The increasing digital insurance penetration opens up new opportunities for digital players and insurance companies which are worth over US$10 billion in the region.
“The unprecedented pace of climate change coupled with COVID-19 induced supply chain shocks have made it absolutely necessary to scale up agri-insurance solutions for the smallholder farming community. Igloo is trying to bring forth an integrated approach with the wider ecosystem to strengthen farm level resilience by focusing on product and distribution innovation. Introducing the first blockchain-based Weather Index Insurance reinforces our commitment to making insurance accessible and affordable through technology,” shared Raunak Mehta, Co-founder and CEO at Igloo. “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.”
Please see here for Igloo’s Weather Index Insurance fact sheet.
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. With a mission of making insurance accessible for all, the firm leverages big data, real-time risk assessment, and end-to-end automated claims management to create B2B2C insurance solutions for platform companies and insurance companies. Igloo’s insurance solutions enable companies to eliminate their exposure to operational risk, create new revenue streams, optimise and enhance existing products and services. Igloo has partnered with over 55 well-known brand names across the markets in various verticals, including insurance, telecommunications, e-commerce, hospitality, health tech and financial services.
For more information, please visit https://iglooinsure.com/.
About PVI Insurance
As an affiliated member of PVI Holdings, PVI Insurance was established in 2011 and operates in the non-life insurance field. In accordance with the efforts of the whole system and pursuing the appropriate business strategy, PVI Insurance Corporation continues to maintain the No.1 position in market share and business efficiency in the non-life insurance market. In the coming years, PVI Insurance’s vision is to become the leading sustainable insurance company in Vietnam and Southeast Asia.
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