High tech in agricultural insurance
Precision agriculture, alongside machine learning, has the potential to reduce agricultural insurance premiums by defining risks and improving risk assessment tools, and allows farms to move more quickly to prevent crop losses.
WorldCover is an early example of an intermediary helping to connect farmers with insurance products. WorldCover uses AI to assess satellite, weather station, and agronomic data to determine the risk of weather events, and is working on smart contracts that use blockchain to trigger automatic payouts.
The automatic disbursement of payouts via nonbank payments providers like M-Pesa allows farmers without bank accounts to obtain insurance. Such automatic payouts through nonbank providers reduces the frictions involved with farmers adopting financial products like crop insurance, which they need to enhance their resilience to climate shocks.
SOURCE: International Finance Corporation