Insurtech firm Lemonade’s non-profit arm has formed Lemonade Crypto Climate Coalition to offer climate insurance to farmers.
The Lemonade Foundation’s coalition will be a decentralised autonomous organisation (DAO) aimed at building, distributing at-cost parametric weather insurance to farmers and livestock keepers in emerging markets.
Avalanche, Chainlink, DAOstack, Etherisc, Hannover Re, Pula, and Tomorrow.io are members of the coalition, alongside Lemonade Foundation.
The insurance offering will be developed as a stable coin-denominated, decentralised application (dApp) on Avalanche.
The cover will be initially rolled out in Africa within 2022.
Lemonade Foundation director Daniel Schreiber said: “The Lemonade Foundation was established to build exponentially-impactful technologies. By using a DAO instead of a traditional insurance company, smart contracts instead of insurance policies, and oracles instead of claims professionals, we expect to harness the communal and decentralized aspects of web3 and real-time weather data to deliver affordable and instantaneous climate insurance to the people who need it most.”
The initial capital to backstop the DAO’s smart contracts will be provided by the Lemonade Foundation and in time all crypto investors will be able to fund the DAO’s liquidity pool.
Lemonade noted that the technology will allow farmers to make and receive payments from their phones using global stablecoins or local currencies.
Pula co-founder Rose Goslinga stated that Arica has an estimated 300 million smallholder farmers and a majority of them are exposed to climate risk as traditional, indemnity-based insurance is unaffordable or unavailable.
“This is where the power of the Lemonade Crypto Climate Coalition comes in: An on-chain solution that can be immediately impactful at scale will allow farmers to finally get financially protected against the increasingly frequent risks such as drought,” Goslinga added.
Chainlink co-founder Sergey Nazarov said: “The Lemonade Crypto Climate Coalition is a prime example of how innovative solutions built on the blockchain can drive global financial inclusion previously unavailable.”