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A Peer-To-Peer (P2p) Agricultural Insurance Approach Based On Smart Contracts In Blockchain Ethereum

Author

Listed:
  • Cristian KEVORCHIAN

    (Institute of Agricultural Economics, Romanian Academy, Bucharest)

  • Camelia GAVRILESCU

    (Institute of Agricultural Economics, Romanian Academy, Bucharest)

  • Gheorghe HURDUZEU

    (Institute of Agricultural Economics, Romanian Academy, Bucharest)

Abstract

Traditional agricultural insurance systems are mainly based on the relationship between two actors: (i) a farmer, who purchases a crop insurance policy in exchange for a premium paid before crop seeding, and (ii) an insurance company that provides compensation for crop damages caused by extreme weather events. Many crop insurance schemes are a mix of procedures, aiming at covering the weather risk by subsidizing (partially or totally) the insurance premium. Yet, the bureaucratic mechanisms designed to evaluate the damages related to the insured crops lead to complex procedures that result in significant delays in covering the damages and implicitly the disruption of the farms’ cash flow and production processes. The insurance system decentralization based on a P2P insurance system implemented on the basis of a framework supported by blockchain technologies dedicated to agricultural insurance through a smart contract system operated on the Ethereum platform can ensure, besides a less bureaucratic agricultural insurance system, a smoother payment to the farmer in a context of social economy that diminishes farmer's distrust of the risk coverage product. The paper is intended to design a technological solution based on the Ethereum blockchain that supports a financial product to cover the production risk through a structured framework on two levels: the analysis-decision level and the payment level.

Suggested Citation

  • Cristian KEVORCHIAN & Camelia GAVRILESCU & Gheorghe HURDUZEU, 2020. "A Peer-To-Peer (P2p) Agricultural Insurance Approach Based On Smart Contracts In Blockchain Ethereum," Agricultural Economics and Rural Development, Institute of Agricultural Economics, vol. 17(1), pages 29-45.
    • Handle: RePEc:iag:reviea:v:17:y:2020:i:1:p:29-45
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    Citations

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    Cited by:

    1. Nishant Jha & Deepak Prashar & Osamah Ibrahim Khalaf & Youseef Alotaibi & Abdulmajeed Alsufyani & Saleh Alghamdi, 2021. "Blockchain Based Crop Insurance: A Decentralized Insurance System for Modernization of Indian Farmers," Sustainability, MDPI, vol. 13(16), pages 1-17, August.

    More about this item

    Keywords

    smart contract; P2P insurance; indexes; blockchain; Ethereum.;
    All these keywords.

    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing

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