Blockchain Climate Risk Crop Insurance


270 million smallholder farmers in developing countries are underinsured and financially vulnerable to impacts on crop production. In sub-Saharan Africa, less than 3% of smallholders have access to insurance.  At the same time, climate vulnerability of crops is increasing and smallholders have not yet developed the capacity to adapt.

Accessible and affordable crop insurance is crucial for smallholder farmers to increase their resilience to the effects of climate change. However, traditional insurers currently don’t cater affordable products to these groups because they are costly to administer and considered unprofitable. And the microinsurance value chain is quite challenging in terms of collecting fees, evaluating claims, and settling payments, leaving a gap in the market and a vulnerable group under-insured against the impacts of climate change. In addition, on the farmer side, there is a lack of trust in insurers due to delayed pay-outs or an absence of pay-outs to the insured.

The Solution 

Blockchain Climate Risk Crop Insurance aims to enable affordable and accessible crop insurance for smallholder farmers at scale, which can pay out quickly and transparently, and reduce transaction costs.

Blockchain Climate Risk Crop Insurance is a digital platform for weather-index crop insurance for smallholder farmers. It will facilitate transparent, timely, and fair pay-outs in extreme weather events, to increase resilience to the effects of climate change.

Blockchain Climate Risk Crop Insurance offers a standardized, digital weather-index insurance platform for crop productions of smallholder farmers in sub-Saharan Africa. It employs smart contracts that are implemented on a blockchain, which facilitates transparent, timely, and fair pay-outs when an extreme weather event occurs.

The instrument’s main objective is to address the uncertainty of financial returns associated with crop production due to climate change by increasing access to crop insurance. By implementing smart contracts on a blockchain, it reduces claim cycles and transaction costs, and increases transparency during the processing of claims, which increases insurer-farmer trust. Smallholder farmers are able to pay for the premium in small installments as low as USD 0.50, which increases uptake of the insurance. On the insurer side, the standardized and digital platform enables a more accessible market, the ability to offer index insurance at scale, and reduced transaction costs.

Implementation and Impact

Blockchain Climate Risk Crop Insurance is under development by Sprout Insure. Key to the implementation of the instrument are the strong partnerships between Sprout, ACRE Africa and Etherisc. ACRE Africa is a recognized service and data provider for index insurance products across sub-Saharan Africa, currently covering over 1 million smallholder farmers. Etherisc is a smart contract developer for different types of index insurance products.

The priority country for the pilot is Kenya, because of ACRE Africa’s strong presence in that market. Alongside implementation in Kenya, other sub-Saharan African countries will be identified for replication. An in-depth market analysis focusing on climate vulnerability, conducive environment, and market size identified that countries in East and West Africa, including Kenya, Rwanda, Uganda, Senegal, Burkina Faso, and Uganda, provide the best opportunities for blockchain crop microinsurance, followed by countries in south and southeast Asia.


In the pilot phase, the aim is to plug in a blockchain-based technology platform in an existing index-insurance infrastructure, to prove the concept of timely and transparent pay-outs. The farmer registers for insurance through a scratch-card attached to a bag of seeds, and pays the premium via mobile money to the developer of the index insurance policy (ACRE Africa). ACRE Africa transfers the premium to an insurance company, who manages the risk pool. ACRE Africa simultaneously registers the policy through Sprout Insure on a smart contract. The ecosystem of smart contracts is an infrastructure developed by Etherisc on the Ethereum blockchain. The smart contracts communicate through an API of Etherisc with the weather database of ACRE Africa.

Once an extreme weather event occurs the smart contract is triggered. Sprout will pay out the smallholders using a duplicate risk pool, created to prove the concept of faster pay-outs. The aim is to decrease pay-out times from up to 3 months to 1 week. An insurance company will reimburse these payments thereafter, with a lag of a few weeks. ACRE Africa and the actors on the technology platform will be reimbursed by service fees.

In the medium-term the aim is to automatize the process entirely. Farmer data will be automatically registered on the smart contracts and premiums and pay-outs occur directly with the insurer.