During SmartCon 2022, Sid Jha, CEO of parametric climate and weather insurance platform, Arbol, and founding partner of decentralized weather and climate data platform, dClimate, detailed how blockchains and decentralized technology such as Chainlink’s oracle networks can transcend the limitations of traditional data and insurance models to better protect people from global climate risk.
In 2020, businesses around the world suffered more than $268 billion in damages from more than 400 major natural disasters. Only $97 billion (36%) of that damage was covered by insurance. According to Jha, this is because the “old” insurance model is unable to keep pace with the rising threat of extreme weather events.
For many of the world’s estimated 600 million smallholder farmers, who collectively produce about a third of the world’s food, this coverage gap is, as Jha put it, “a huge problem.”
“That means that a random event can set you back, can bankrupt your business, can destroy your livelihood, and you have no way to recover from it,” he said.
Arbol uses Chainlink oracles to retrieve real-world weather and climate data related to temperature, rainfall, windspeed, etc. and write insurance smart contracts that automatically pay out when certain data prerequisites indicating extreme weather events are met. Bypassing the traditional claims process, the platform is able to provide affordable insurance at scale.
From crop insurance in the developing world to rainfall protection for destination vacation rentals, Jha believes the possibilities are “endless.”
“We’ve just gotten used to letting weather be a big problem for us, but there are many, many types of products that we can develop to reduce those risks that are spread out all over our supply chains,” he said.
He illustrated the vital role Chainlink’s decentralized oracles play in securely and reliably executing Arbol’s insurance smart contracts, paving the way for the platform’s success.
“We started working with Chainlink when we were just a tiny company, a few guys just testing things out. Now we have grown to a much larger footprint with 700 plus institutional clients. Our revenues have gone from $2 million to $200 million in two years.”
In 2021, Arbol’s founders launched dClimate, a Chainlink-powered decentralized weather and climate data marketplace, to accelerate efforts to close the weather insurance gap by satisfying the need for accessible, accurate, immutable climate data, forecasts, and models.
“It’s creating the infrastructure on which others can build climate applications,” Jha explained.
He highlighted numerous deficiencies within the current system for collecting climate data.
“There are gaps, there are no standards. It’s a mess, honestly. Data comes from all these varied agencies and there’s no real incentive to contribute data.”
Jha said dClimate offers a solution to these problems by providing a platform where anyone can buy and sell climate and weather data that is verified by Chainlink adapters.
He believes that this data, combined with technology like decentralized storage solutions and artificial intelligence (AI) that can convert satellite imagery into actionable analytics, paves the way for blockchain-based applications with the potential to help people mitigate and possibly even reverse the damaging effects of climate change.
He concluded, “Putting it all together, our mission is to take blockchain and make it work for the real world, to make it have an impact. And that requires working with everybody from the small commercial farmer, to large energy companies, to conglomerates, to insurers, and we do all of that by bringing together data technology and capital on one platform.”
Watch Sid Jha’s full presentation at SmartCon 2022.