Decentralised Peer-to-Peer Crop Insurance

Abstract

Agriculture is the lifeline of Indian economy which contributes to 22% of the GDP, provides 58% employment, and sustains 69% of the population. However, agricultural production comes with various risk factors beyond human control. Farmers are highly exposed to risk and it is aggravated by the limited span of risk mitigation instruments such as insurance where there is a lack of participation from the private sector and the claim payout procedure is very lengthy, due to which the farmer cannot initiate new cropping activity or it is delayed. There is no proper and adequate provision of security for crops grown by Indian farmers and despite increasing vulnerability, they have not yet fully developed the capacity to mitigate risk effectively. There is a need to design innovative insurance products to balance the interests of the insurer as well as the insured. With the Prime Minister's call to be "self sufficient" or "aatmanirbhar", in this paper we present a decentralised peer-to-peer crop insurance framework which enables to overcome the current disadvantages by securing farmers' interests, eliminating intermediaries and providing a secure, standardized, and transparent system that does not hinder any information from stakeholders. Through blockchain technology, the system promotes trust in a trust less environment wherein the farmers and the private investors go into a contract. The investors pool their investments and provide cover for the farmers, thus help the nation become self sufficient and help the farmers prosper.