Sprout - Crop Microinsurance

About Solution

The vast majority of smallholder farmers do not have crop insurance, estimated at around only 1% in coverage. GSMA studied the microinsurance sector in Kenya and noted that “under 10% of services tracked offer agricultural insurance.” Meanwhile, according to the FAO, climate change disproportionately impacts smallholder farmers due to their direct dependence on natural resources and detachment from the extension services and social protection systems that could enable them to build their capacity and resilience.” Insurance companies find it expensive to reach rural populations and make a profit offering crop insurance to smallholder farmers, and at the same time, farmers now need it the most. This gap is $100 billion and impact hundreds of millions of smallholder farmers around the world.


In Kenya, the State Department of Agriculture informed Sprout that they spend 5 to 10 times more on emergency relief operations than they do on fully subsidizing pastoralists for drought insurance. The opportunity for governments to also become independent of aid is an enormous opportunity.




Sprout is pioneering a novel blockchain infrastructure that enhances the development of existing and new weather-indexed insurance products to increase speed, reliability and cost-effectiveness of direct pay-outs to individuals.

      Over 500 Smallholder farmers around the world have limited opportunities to access markets. Selling to Europe and US markets require risky investments and new plant varieties.

      UNTAPPED MARKETS
      For insurance companies customer acquisition costs and claims processes are too expensive to serve farmers the protection they would need today.

      FARMER'S RISKS
      This risky investment combined with the uncertainty of weather due to climate change puts farmers at high risk in export!

      How we do it?
      - Our service is mobile-only and can be bundled with farm inputs (seeds, fertilizer, equipment)
      - Farmers pay for the insurance on their terms in bite-sized tranches
      - We don't use paper our contracts are signed and executed on smart contracts. Therefore everybody on this planet can audit, that farmers received their payments.
      - No negotiations or misinterpretations as policies are easy to understands and payouts are instant.


      First evidence collected:

      We compared data relating to the development and operating of our first insurance pilot and that of a large reinsurer. We found that while our decentralized product required up to three intermediaries, a typical centralized product made use of between six and. Our claims ratio was between 60 and 95%, compared to a ratio of 25-60% for a similar centralized product. Furthermore, our operating costs were significantly lower (at 3-5%, compared to 30-40% for the similar traditional product).


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