Every business plan involves a degree of risk. For some it is uncertainty about the viability of the product, while for others it is a risk of competition from other organizations making profitability an uncertain proposition. For many of the world’s farmers, however, the risk to their business is outside their control due to weather conditions and climate change.
To mitigate this risk, insurance has long been a part of the farming business model. Farmers pay into the policy and in case of a crop failure through extreme weather or other disaster they file a claim and are reimbursed for their loss. This model works well in developed countries that support a traditional business ecosystem and its inherent costs. Smallholder farmers in developing countries, however, risk their livelihood on increasingly unpredictable weather patterns, drought and disease without the financial resources required for traditional insurance policies.
IBISA and the Community Mindset
Since the earliest days of human agriculture, communities have proven to be the most effective way for people to join together for protection and cooperation. For today’s smallholder farmers, joining a community risk pool can literally be a life-saving proposition. Members can provide one another with a degree of protection to weather the challenges that might otherwise ruin them.
IBISA makes microinsurance possible for farmers in developing countries, providing peace of mind for an extremely low fee. Using blockchain technology that distributes risk and ensures equitable treatment and a simple, crowdsourced damage assessment process, IBISA helps its members recover financially from crop loss. When a farmer encounters a loss, a group of “watchers” assesses the damages, and IBISA’s proprietary platform merges this group of remote assessments to determine the best course for reimbursement.
The unique challenge faced by IBISA in protecting its members is scaling the technology to cover large networks of farmers in a geographically distributed area. Working with the farmers and consultants in satellite technology and actuary risk modelling requires a secure, robust platform that has distributed ledgers for risk and cost reduction, making blockchain the ideal model to ensure that IBISA can deliver financial help and reimbursement for losses without the traditional insurance network of assessors and adjusters. This technology helps keep overhead costs extremely low, which makes the service affordable for even the most economically challenged farmers while being still profitable.
“It’s frightening how many of the world’s farmers are on the edge of sustainability and exposed to modern slavery. There are 500 million of these small-scale farmers across the globe, and climate change is making their situation even more scary,” remarked María Mateo Iborra, CEO of IBISA. “But for many cultures such as India, the community concept is so ingrained that it’s a very natural step for them to use our service to protect one another.”
IBISA works with local organizations that already have a foothold in communities with a large smallholder presence, which in turn offer IBISA protection as a part of their portfolio.
LOT Network and the Community
The community-based mindset of IBISA and its members makes LOT Network a natural fit for protecting its IP. LOT helps businesses protect their IP by sharing risk and reducing the effect PAEs have on community members. Just as having a larger pool of farmers increases the resiliency of the community as a whole, LOT Network becomes even stronger with each business that joins.
“Not a lot of small businesses understand what PAEs are,” said María Mateo Iborra. “But that doesn’t mean they aren’t at risk. Together we share our strength and make it harder for others to harm any of the community members.”
With hundreds of members throughout the world ranging from Fortune 500 enterprises to small startups, LOT is bringing together businesses dedicated to making the world a better place.