Igloo, a regional insurtech company, expands its blockchain-based parametric index insurance to coffee farmers in Southeast Asia. This move demonstrates Igloo’s dedication to providing coverage to underinsured communities and industries, following the successful implementation of their product with rice farmers.
Southeast Asia, known as the coffee belt, is a major global producer of coffee. With Vietnam and Indonesia leading the way, the Philippines also plays a significant role in the industry, with projected revenue of US$6.7B in 2023, according to Statista. The local market is expected to experience an annual growth rate of 5.69% until 2025.
Coffee farming is a substantial and labor-intensive investment, vulnerable to climate hazards that pose challenges for farmers and disrupt supply chains. These extreme weather conditions can have a detrimental impact on coffee production, making it crucial for farmers to have appropriate insurance coverage.
Although there are existing insurance products available for coffee farmers, they often fail to address the specific risks faced by these agricultural families. The process of assessing damages is complex and time-consuming, placing an additional burden on farmers already facing financial hardships.
“The Philippines being an agricultural powerhouse and one that is at a higher risk of suffering from the impacts of climate change is a country we believe will benefit from having Weather Index Insurance. We are currently working with our partners to make this product available in the country and other markets in the near future. In addition, we are also exploring expanding the product’s coverage to include other indices such as earthquakes,” according to Mario Berta, Igloo’s Country Manager for the Philippines.
Igloo’s Weather Index Insurance tackles these challenges by eliminating the need for individual claim verification, thereby reducing transaction costs and enabling faster payouts to farmers. This innovative approach involves the collection and monitoring of rainfall data, which is then used to calculate claims based on predetermined values for losses caused by natural factors. By hosting the business rules governing claim payouts on a public blockchain, Igloo leverages the attributes of transparency, consistency, and impartiality, ensuring a credible and efficient system.
While currently available in Vietnam for rice and coffee farmers, Igloo plans to expand the Weather Index Insurance to other Southeast Asian countries, including the Philippines, in the near future. This expansion will provide much-needed protection to coffee farmers in the region, enabling them to mitigate risks and safeguard their livelihoods against unpredictable weather patterns.
“Our next step is to bring very innovative products (to the Philippines). My dream is to have farmers, who can open a mobile wallet app and get insured for twelve hours because he is working for twelve hours and it will just cost him a certain amount. If in those twelve hours, he gets into an accident, he is reimbursed,” Berta said during my recent online interview with him explaining how granular Igloo wants to go and be of service to the Filipino people.