InsurTech

Insurtech in the Philippines: Could It Be The Answer To Agricultural Woes?

Agriculture is the primary source of livelihood for rural Filipino families and is considered the backbone of the Philippine economy. According to the latest Census of Agriculture of the Philippine Statistics Authority (PSA), the Philippines has 5.56 million farms/holdings covering 7.19 million hectares and contributes to about 18 percent of the country’s Gross Domestic Product (GDP). However, the industry has been facing several challenges in recent years.

Agricultural productivity in the Philippines has been lagging behind its Southeast Asian neighbors for many years. Several challenges have beset the industry, including traditional farming methods, insufficient infrastructure, and market forces.

One of the agriculture sector’s challenges is the lack of access to financial services, limiting farmers’ opportunities to invest in their businesses and contribute to economic growth.

The Philippines’ climate also presents another challenge for the sector as the country is vulnerable to extreme weather conditions, such as typhoons and floods. These events often damage crops and lead to loss of life and livelihoods.

Traditional insurance slow to assist farmers

Crop insurance is a critical tool in mitigating the impact of weather-related risks on farmers’ livelihoods and food security. In the Philippines, where agriculture is a vital sector of the economy, crop insurance can help farmers begin farming anew after a calamity.

However, due to the country’s rugged terrain, it is often difficult for insurance agents to visit farms in the wake of typhoons and manually assess the damage. This difficult process makes it difficult for farmers to obtain the insurance coverage they need in a timely manner.

Blockchain-based insurtech could pave the way

There has been a growing interest in using blockchain technology to solve these agricultural challenges. With the ability to provide immutable data and smart contracts, blockchain is seen as a game-changer for the insurance industry.

A challenge in the agricultural insurance industry is the lack of trust between farmers and insurance companies. Blockchain technology can address this challenge by providing a decentralized and transparent system that allows farmers to access and control their data and make it easier for them to prove their claims.

This will help reduce the processing time for claims and ensure that farmers get their payouts faster. Smart Contracts can also automate the process of claims and payments, reducing the administrative burden and costs for farmers and insurance companies.

In addition, blockchain-based insurance or insurtech can also help reduce fraudulent claims. Making the claim process more transparent and tamper-proof will make it more difficult for unscrupulous individuals to defraud the system.

Igloo exploring insurtech in Philippines

Insurtech company Igloo is exploring the potential of providing blockchain-based insurance to farmers in the Philippines. This is in response to the challenges faced by the agricultural sector, which often experiences losses during typhoon season.

Igloo’s blockchain-based insurance system will help farmers receive compensation for their losses more efficiently and transparently. The insurtech company has introduced the Weather Index insurance, which pays out a benefit when the rain index hits the flood or drought threshold. The claim is automatically paid, so farmers won’t have to worry about making a claim.

The Weather Index Insurance is also set to roll out in more agriculture-driven countries in Southeast Asia, including Indonesia and Thailand.

Meanwhile, in Indonesia, Lexasure Financial Group has also started offering blockchain insurance to farmers. The insurtech company partnered with AgriON: PT iSAN to provide mobile insurance products to thousands of smaller Indonesian farmers. Under the partnership, Lexasure’s digital insurance offering for farmers, Flourish, will be integrated with the AgriON app.

Could insurtech solve agricultural pains in the Philippines?

The adoption of Blockchain-based insurtech in the Philippines can help solve many of the challenges faced by the agricultural sector. It can help speed up the claims process, reduce fraud, and make the system more transparent and efficient.

Despite the potential of blockchain technology to solve many of the problems faced by the agricultural sector in the archipelago, some challenges still need to be addressed. These include the lack of awareness about blockchain technology, regulatory certainty, and technical expertise.

With the right solutions in place, blockchain-based insurtech can help the agricultural sector in the Philippines reach its full potential.