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Climate risk insurance based on blockchain technology in Kenya

Read about how blockchain technology is providing a solution for crop insurance for smallholder farmers in Kenya.
Climate risk insurance based on blockchain technology in Kenya


Accessible and affordable crop insurance is crucial for smallholder farmers to protect their livelihoods and increase their resilience to the effects of climate change. Unfortunately, traditional insurance is not able to provide sufficient protection. In Sub-Saharan Africa, only three percent of smallholder farmers have access to agricultural insurance. Insurance can be expensive, and there is little trust in traditional insurers due to histories of delayed or even absent pay-outs.

Block chain for climate risk insurance use case

The climate risk insurance project in Kenya was selected as a use case of the Climate Ledger Initiative (CLI). More information is available on the CLI main page on weADAPT.

With the support of blockchain giants Chainlink and the Ethereum Foundation, Etherisc and Acre Africa launched a project in Kenya in October 2020. The purpose of the project is to make climate risk insurance cheaper, faster and more transparent, based on blockchain technology. Etherisc provides its blockchain platform, the “Generic Insurance Framework“ or GIF, as a solution to automate an existing insurance product by ACRE Africa, which is distributed in cooperation with village-based agents and farm input suppliers, through scratch cards and a USSD telecommunication service. When planting seeds, the farmer can register the code using the SMS/USSD function on their feature phone to provide necessary personal and agricultural information. The basic insurance premium is prepaid, included in the price of the seeds. Top-up payments can be made through M-PESA to increase the cover.

Once the insurance smart contract is active, it will autonomously track the weather data relevant to the farmer’s policy. Such data is sourced from satellite weather data “oracles” in real time. The smart contract can automatically execute the pay-out through an API connecting to the mobile payment network as soon as the agreed conditions for drought or flood are met as defined in the farmer’s respective policy. Such instant payments solve an existential cash-flow problem that farmers have with the delays between their claim and the insurance pay-out. The solution has the potential to achieve premium reductions of up to 30% and to reduce claim cycles from 3 months to 1 week. The pay-outs are done through M-PESA directly to the farmer’s mobile phone.

Etherisc’s project in Kenya aims to provide smallholder farmers with access to affordable crop insurance to increase their resilience to the effects of climate change. The blockchain-based solution brings premiums down to an affordable level. It helps to eliminate asymmetric access to information and increases transparency. The automated payments increase speed of transactions, lower operational costs and avoid conflicts of interests for the insurer. This helps to build trust that claims will be paid when farmers need them most urgently.

The first season, 2021, saw 17,000 insured farmers live on the platform. The first payments to farmers could be made even before the end of the season.

Text from the Report from INATBA and CLI ‘Blockchain for Climate Action and the Governance Challenge’ (2021).

The Etherisc Impact project in Kenya is a use case supported by the Climate Ledger Initiative (CLI) with the support of the Swiss Agency for Development and Cooperation (SDC).

Partners: Etherisc Impact B.V. (The Netherlands), ACRE Africa (Kenya)

Further resources

Climate Ledger Initiative (CLI) prepare the annual ‘Navigating Blockchain and Climate Action’ report to track progress according to latest research and use cases.

Related resources

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