Blockchain-based insurance for climate mitigation
One example of blockchain innovation for mitigation is how the technology could help hundreds of millions of people impacted by tropical storms.
In emerging economies like Vietnam, people often suffer from tropical storms without adequate insurance protection, and even for those who are covered, many insurance claims are refused if the damage is caused by a natural disaster.
Dr Huy is mentoring and advising on a new project to develop a blockchain-based parametric insurance platform for tropical storms.
The project, led by Hillridge Technology, was recently awarded a US$200,000 grant by NEAR Foundation, one of the world’s biggest blockchain foundations.
The platform will be piloted in Vietnam, where around 7.7 million people were impacted by typhoons last year.
According to the Office of the UN Resident Coordinator in Vietnam, 1.5 million people were directly affected, and 177,000 were considered vulnerable and required humanitarian assistance.
In economic terms, typhoons caused 30 trillion dong (US$1.3 billion) in damage – about 0.37% of Vietnam’s GDP – in 2020.
Dr Huy says the project will provide a weather-based technology that improves the coverage and quality of insurance for farmers and others, going well beyond current crop or livestock insurance.
“We’re using a global weather oracle and smart contracts – an application of blockchain – for settlement of insurance claims. The premium is based on the short-term risk of bad weather and is tailored to the insuree,” he says.
“The company’s technology will continually scan the weather and if weather triggers occur, as per someone’s policy, the payment will be processed. This way the payment will be made within weeks, not months, and the technology makes the claim for you.”
Story: Elle Spring