Agentic AI Weather Models for Parametric Monsoon Insurance (India)

Introduction

Climate change has created a need for non-traditional methods of insuring crops and structures against natural weather related disasters.

Results

AI Agents can create applications using climate models to sell decentralized, parametric, blockchain insurance that utilizes smart contracts that has proven to be more practical and cost effective for the insured and the insurer.

Discussion

Overview of Parametric Insurance

A parametric insurance policy pays based on pre-defined thresholds and characteristics of an event (i.e. “triggers”), such as windspeed, magnitude of seismic events, rainfall intensity, etc.

The complexity of parametric policies lies in developing the structure. Once the policy is in place, the claims process is clear and simple!

Step 1

Define Insurance Locations

Insured selects location parameters. It can be tied to the insured’s location(s) or other sites such as an important customers, critical suppliers, or key infrastructures.

Step 2

Determine Triggers and Payout Structure

Coverage triggers, including peril and measurement sources, and payout structure must be determined. Terms are unique based on the insured’s specific needs.

Step 3

Event and Payment

If an event occurs and meets or exceeds the trigger, the parametric policy pays according to the agreed payout function. Insureds follow a simplified “proof of loss” process to certify financial impacts.

The Main Benefits of Parametric Insurance Include:

Payout Flexibility

Parametric policies account for the circumstances around an event, rather than the actual losses incurred. The insured can use the proceeds however they see fit to cover any direct or indirect financial loss associated with the event.

Speed of Payout

Insurers use near real-time and publicly available data so claims can be paid quickly - often in a matter of weeks. This provides valuable cashflow, which may enable a business to recover faster from an event.

Transparency

The parametric contract predefines everything, so there’s no ambiguity over when, how, and how much the contract is going to pay out. This level of clarity and certainty is unmatched in the traditional market.

Exclusive Parametric Products

Peril-agnostic Solutions

Parametric structures can also provide peril-agnostic applications, meaning it can cover all risks that impact the insured’s operations. For insureds that are heavily dependent on single sources of revenue, such as a tourism-driven community or business, having a solution that focuses on the impact rather than the cause of loss is paramount. For example, a hotel may lose revenue due to a hurricane, a public health crisis, a downturn in consumer spending, or a failure of local infrastructure outside of their control.

Parametric Monsoon Insurance (India)

Parametric monsoon insurance in India is a type of insurance that provides payouts based on pre-defined weather parameters, such as rainfall or wind speed, rather than traditional loss assessments. This allows for quicker claim settlements and can be particularly useful for mitigating the risks associated with heavy monsoon rainfall. Nagaland is the first Indian state to pilot this type of insurance for its entire geography against heavy rainfall.

Parametric Insurance for Weather Related Natural Disasters

Parametric insurance differs from traditional insurance by relying on pre-defined, measurable parameters to trigger payouts, rather than assessing individual losses after a disaster. For example, a parametric monsoon insurance policy might specify that a payout is triggered if a certain amount of rainfall is recorded in a specific location during the monsoon season. This approach allows for faster payouts, as there is no need for detailed damage assessments, which can be time-consuming and costly.

Uses cases for Parametric Monsoon Insurance in India:

Nagaland's Pilot Program:
Nagaland, a state prone to heavy rainfall and floods, has pioneered the use of parametric insurance to manage the financial risks associated with monsoon-related disasters. The state's program, developed in collaboration with Tata AIG General Insurance Company Limited, uses rainfall data to trigger payouts, providing a crucial financial safety net for the state's disaster response fund.
Benefits:
- Faster Payouts: Parametric insurance allows for quicker payouts compared to traditional insurance, providing timely financial relief to individuals and governments.
- Reduced Administrative Costs: The reliance on pre-defined parameters simplifies the claims process, reducing administrative costs and delays.
- Climate Change Adaptation: Parametric insurance can be a valuable tool for governments and businesses to adapt to the increasing frequency and intensity of climate-related disasters.
Challenges:
- Basis Risk: One potential challenge is "basis risk," where the insured's actual losses may differ from the amount paid out based on the parametric trigger.
- Data Accuracy: The effectiveness of parametric insurance relies on accurate and reliable data for the pre-defined parameters.

A. Decentralized Blockchain Insurance utilizes smart contracts for payouts when triggers access a claim:

Current Github Repo: https://github.com/ethereumdevnews

Main Features:

Ethereum (EVM)
EtherISC
Chainlink

D1Conf: Blockchain, Human Rights, and Insurance

Blockchain technology is a powerful tool to decentralize the protection of human rights, with many parallels on-chain insurance, Guangmian Kung, Integrations Lead at Kleros, argues. A decentralized insurance fund could provide universal coverage to all participants of a blockchain ecosystem, reducing reliance on state-run programs.

What are human rights?

Core Rights from UN Declaration include a Right to Equality, Fair Trial, Freedom of Religion and Participation in Cultural Life.

In the real world, these depend on:

🧍🧍‍♀ Physical presence to invoke rights.
⚖ Legal frameworks ensuring enforcement (e.g. labor laws).

Blockchain Advantage: Trustless and Permissionless

Blockchain offers two transformative attributes for human rights: trustlessness and permissionlessness. Censorship resistance allows for unmediated communication and transaction. Decentralised autonomy enables broader participation in decision making.

So what would this mean in practise?

Right to social security: 🧮 Rather than Government programs providing financial aid based on eligibility criteria, 💻 decentralised funding pools and conditional escrows automatically distribute benefits to verified members based on transparent, community defined rules
Right to remedy through tribunal: ⚖ Rather than the state providing legal courts, 💡 decentralised dispute platforms and juries offer impartial remedies, enforced with conditional escrows
Right to freedom of degrading treatment: 🚓 Rather than the state enforcing laws through policing and military power, ⛓️‍💥 decentralised courts rule with escrowed bounties for evidence and compensation
Right to recognition as a person before the law: 🪪 Rather than the state issuing legal documents (birth certificates and IDs), 💻 de-centralised identify protocols enable cryptographically verified on-chain identities granting access to services and rights

So what could this mean for insurance?

Imagine a decentralized fund where community members contribute and benefit collectively. A decentralized insurance fund could provide universal coverage to all participants of a blockchain ecosystem, reducing reliance on state-run programs, for disaster recovery or universal healthcare.

Furthermore, claim disputes can be adjudicated through peer-reviewed oracles instead of lengthy court battles.

Written by Etherisc

Decentralized insurance https://etherisc.com

https://blog.etherisc.com/d1conf-blockchain-human-rights-and-insurance-0f8a4678ef20

B. Agentic AI Models and AI Agents

I was able to create an Agentic AI application for Monsoon Insurance in India using the BASE AI Agent Kit, NEAR AI, and Celo. Below I detail the technical stack both frontend and backend.

Github Repo: https://github.com/ethereumdevnews/monsoonshield-india

AI Agent Technical Stack

# Monsoon Parametric Insurance Platform - India

A comprehensive web application for browsing and purchasing monsoon insurance policies in India. Built with authentic Indian parametric insurance data and implementing proven models from successful programs.

## Features

- Insurance Policy Browsing: 5 authentic policy types with coverage from ₹50K to ₹20L

- Premium Calculator: State-based risk assessment with real-time calculations

- Weather Risk Visualization: Data for 16 major Indian states

- Policy Application: Complete form with validation

- Parametric Insurance Education: Information about automatic payouts based on rainfall thresholds

## Technology Stack

- Frontend: Vanilla HTML5 with Alpine.js for interactivity

- Backend: Node.js Express server with health check endpoints

- Styling: Tailwind CSS

- Data: Authentic Indian weather risk data embedded in application

- Deployment: Cloud-ready with proper health checks

## Quick Start

1. Install dependencies:

```bash

npm install

```

2. Start the server:

```bash

npm start

```

3. Access the application:

- Main application: http://localhost:3000

- Health check: http://localhost:3000/health

## Deployment

The application is configured for cloud deployment with:

- Express.js server with compression and CORS

- Health check endpoint at /health

- Environment variable support for port configuration

- Graceful shutdown handling

## Data Sources

- Authentic weather risk data for major Indian states

- Real-world policy structures from successful programs like Nagaland's DRTPS

- Proven parametric insurance implementation models

## Architecture

The application uses a parametric insurance model with:

- Automatic payouts based on rainfall thresholds

- State-based risk assessment

- Mobile-responsive design

- Professional UI with comprehensive policy information

## License MIT

Developer Information

EQUAKE dInsurance: Decentralized, self-executing, parametric earthquake insurance built on the Ethereum blockchain, utilizing EtherISC smart contracts with the Chainlink oracle.