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The importance of decentralized insurance in a destabilizing climate – TechCrunch

What does it mean for the economy, government and communities when “once in a lifetime” weather events begin to occur each year?

We are witnessing a whole new scale of natural disasters around the world. In the past, emerging economies were blamed for triggered climate disasters, but no matter where they live on Earth, it is now impossible to ignore the devastating effects of climate change.

Wildfires in California add thousands of reported deaths each year due to poor air quality, but in Germany hundreds have died this year as a result of record floods. .. Preparing for such extreme and dangerous weather conditions is now a priority for all of us.

This is one of the many questions that arise from this increase in extreme weather events. Who will submit the bill? NS Report from AON It was found that the total economic loss from natural disasters in the first half of 2021 is estimated to be approximately $ 93 billion.As we get closer 2021 United Nations Climate Change Conference (COP26), the economic impact of climate change is imminent in a series of problems to be resolved.

Climate change is listed as the greatest risk to the global economy and can be estimated Total economic value reduced by 10% by 2050.. As always, this case is more difficult for emerging economies, with Malaysia, Thailand, India, the Philippines and Indonesia being the most common. Economically adversely affectedThe world economy is facing a loss of up to 18% of GDP by 2050.

It is time to evaluate alternative approaches to mitigate the effects of climate change. What are the billions of economically excluded people in emerging economies to deal with these catastrophic consequences?

Blockchain forever

Cryptocurrencies and non-fungible tokens (NFTs) Fair share of scrutiny When it comes to energy consumption, many good areas still need attention and resolution. However, beyond these use cases, more blockchain-based solutions have emerged that are specifically designed to protect those who are unfairly affected by climate change.

Blockchain is already playing a positive role, from promoting regenerative agriculture to promoting conscious consumption. Another rapidly emerging area of ​​growth is decentralized parametric insurance. World Economic Forum As a means of providing a lifeline to traditionally poorly serviced communities facing increasing turmoil due to extreme weather.

The advantage of decentralized parametric insurance is its simplicity. This can be understood as an “if / then” equation that is automatically executed via smart contracts. For example, if it rains 5 inches within 24 hours in a particular area, the insured farmer will receive immediate payment according to the agreed contract for flood-related damage. It’s very simple.

By removing the expensive insurance valuation process and combining it with a significant innovation in the automated payment process, parametric insurance significantly reduces transaction costs and billing cycles. Parametric insurance claims can be made via a basic phone with a network connection, backed by a blockchain with access to remote people and perhaps, perhaps surprisingly, only basic technology. Insurance policy is available.

Protect the world food chain

Climate change will almost certainly raise food prices and erode the ability of many to buy selected foods in the short term. In the case of crop protection against weather risks, parametric insurance usually provides an additional layer of protection for farmers who do not have access to traditional insurance products.

The fate of their yields is intertwined with increased carbon emissions, not by their own negligence. This poses a serious threat not only to global food security, but also to employment security for smallholders. Considering a small farmer who owns less than 5 hectares of land 50% on average In the world’s food production, implementing protection is necessary for the world’s food supply.

In today’s emerging economies, as many as 270 million smallholders are uninsured, Only 20% You can take out agricultural insurance. This number drops to just 3% in sub-Saharan Africa.

The world’s population is projected to reach nearly 10 billion by 2050, and smallholders urgently need new ideas to strengthen protection, coupled with the crisis facing farmers in emerging economies. It is said. Blockchain-enabled data-driven innovations such as decentralized parametric insurance act as a multi-faceted solution, providing relief for people suffering from harsh weather conditions, encouraging conscious consumption, and at the same time increasing capital. Drive to climate adaptation. It benefits smallholders and global food production.

Use cases and investor expansion

As the climate of our planet becomes more destabilizing, innovation can play an increasingly important role in our efforts to manage catastrophic events and scale their impact. I have.

Countries such as the UK are already Consignment report About the need for stronger protection for those at risk of flooding due to rising sea levels. There is an opportunity to rethink and change the way flood risk is assessed and premiums are calculated. Parametric contracts can provide insurers with well-founded data to report flood depth and generate accurate and timely payments.

Decentralized insurance is not only more comprehensive for those who benefit from coverage, but also offers a whole new class of investors who can redefine the definition of risk capital. This form of insurance is much more open, allowing the participation of a wider group of investors, as well as closed stores of high-capital investors in traditional markets.

In addition, blockchain could act as a medium for crowdfunding and insurance to cross in the name of benevolent social and environmental impacts. We are highly motivated to invest in CSR (Corporate Social Responsibility) and ESG (Environment, Society, Governance) initiatives.

ESG fund Earn over $ 50 billion in new money in 2020 — More than double the previous year. In addition, the number of US ESG funds increased to around 400 last year, up 30% from 2019.

Act now and talk later

Millions of people around the world are now facing years of inaction as world leaders meet at COP26 to determine long-term strategies and approaches to tackle climate change at the national and international levels. Suffering from the consequences of delays in actual change.

Today, blockchain solutions such as decentralized parametric insurance are making concrete steps to ease pressure on those most affected by climate change. While we are waiting for political consensus on a cohesive global approach, blockchain provides an easy-to-implement solution to help those in need most.

The importance of decentralized insurance in a destabilizing climate – TechCrunch Source link The importance of decentralized insurance in a destabilizing climate – TechCrunch

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