Cryptonews Blockchain News Startup Arbol Debuts AI and Blockchain-Driven Climate Insurance Platform – How Does it Work?

Startup Arbol Debuts AI and Blockchain-Driven Climate Insurance Platform – How Does it Work?

Sead Fadilpašić

Last updated: June 26, 2023 06:55 EDT | 2 min read

Arbol, a US-based startup, has unveiled a blockchain and AI-powered parametric insurance platform, created in partnership with The Institutes RiskStream Collaborative.

“dRe is live and in production,” said a press release on Tuesday.

It’s described as the first on-chain data calculation tool for reinsurance and “a significant milestone” for parametric reinsurance.

Parametric or index-based insurance is a type of insurance contract that insures a policyholder against the occurrence of a specific event, such as floods or storms, by paying a set amount based on the magnitude of the event.

The announcement said that,

“dRe Lifecycle Dashboard is a smart contract-based system that enables efficient and transparent parametric loss calculations for severe storm catastrophe transactions.”

The platform utilizes validated weather data from the decentralized climate data network dClimate and Chainlink‘s decentralized oracle network. It then “triggers” a smart contract based on wind speed and location for specific hazardous events.

The system automates “claim initiation, notifications, and loss calculations, resulting in rapid payouts, streamlined data flow, and heightened transparency,” the team behind it said.

dRE also leverages the Arbol risk framework and pricing platform, powered by artificial intelligence algorithms “for efficient underwriting,” a company spokesperson told CoinDesk.

The platform’s design is flexible, thus allowing for its adaptation to various dangers including rain, heat, or wind, and the potential for non-parametric insurance event notifications.

All this makes it “a potent game-changer” in the insurtech landscape, its creators opined.

‘Not Just a Step Forward, But a Leap’

The blockchain-based platform was developed by global climate risk coverage platform Arbol and The Institutes RiskStream Collaborative, said to be the insurance industry’s largest blockchain and emerging technologies consortium.

It employs technologies by the Kaleido platform, said the press release, and it uses RiskStream’s Canopy platform, an end-to-end reusable blockchain framework.

Sid Jha, Founder and CEO of Arbol, argued that dRE transforms the way in which severe storm catastrophe transactions are managed by “providing rapid, auditable, and reliable payouts,” adding that,

“By leveraging blockchain technology and smart contracts, we are fundamentally reshaping the landscape of parametric (re)insurance. This platform is not just a step forward; it’s a leap.”

The CEO said that the company’s focus is currently on severe storm events, but opined that the system’s design has “far-reaching implications, paving the way for adaptations to other perils.”

Similarly, Patrick Schmid, President of The Institutes RiskStream Collaborative, sees this platform as the first of many applications to be produced.

Per Schmid,

“Transitioning this parametric (re)insurance application to production on the RiskStream Canopy platform represents a pivotal demonstration of blockchain’s potential in the insurance industry.”

Arbol and The Institutes RiskStream Collaborative announced their strategic partnership in May, saying that thes sought to create “significant value” for the insurance industry by showcasing the power of blockchain and decentralized data storage.

The initial focus of the partnership was on developing an innovative, blockchain-driven parametric solution for this industry, which would improve trust and collaboration among all parties involved, the duo said.

It could be extended to non-parametric insurance solutions for reinsurance programs as well, they stated in May, “harnessing the unique value of smart contracts and DLTs.”

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