Agricultural microinsurance startup IBISA announced that it has raised a seed round of €1.5 million – approximately $1.70 million. The round was led by London-based specialized investor Insurtech Gateway, with participation from Rockstart’s AgriFood fund and others.
Microinsurance typically refers to offering coverage to low-income people against a specific class of risks. In IBISA’s case, these are small farmers whose livelihoods might be affected by adverse climate events, which are unfortunately on the rise.
While based in Luxembourg, the startup is focused on emerging markets, with a partnership-based approach. “We work with mutuals, insurers, microfinance institutions, research institutions, farmers and breeders associations and governments,” its site explains.
Since being founded in 2019, the company has worked with partners in the Philippines, India, and Niger. It now plans to use its funding to hire and expand its presence in existing and new markets.
It’s easy to see why farmers might be relieved to get compensated when their crops get damaged. But there are also several reasons for them not to have agricultural insurance – most of them don’t, according to IBISA. On one hand, options might be too costly; on the other, paperwork to claim a payout might be too daunting.
This is where technology comes in: IBISA’s payouts are meant to be quick and hassle-free, because rather than requesting individual claims, it relies on a collective index. That’s index-based insurance, also known as parametric insurance, since payouts are triggered by a certain parameter – for instance, notice of catastrophic weather events.
This approach also helps reduce operating costs on the insurer’s side, making lower rates worth offering, said Insurtech Gateway’s co-founder Stephen Brittain.
“Historically, microinsurance was not commercially viable due to many reasons such as low premiums, expensive claims handling, challenging distribution and a lack of trust.”
What changed? Again, technology.
If IBISA and others put trust into an index, it’s because it is supported by data. Its co-founder and CEO María Mateo Iborra worked for several years in the satellite industry, and a key element of the startup’s approach is its reliance on orbit images to assess damage. In addition, it relies on crowdsourced data from local ‘watchers.’
Spacetech and crowdsourcing aside, there’s also a blockchain element to IBISA, which sees it as a way to keep costs low. Its name actually stands for “Inclusive Blockchain Insurance Using Space Assets,” and it has been accelerated by the European Union’s blockchain-focused project Block.IS.
The company also recently presented itself at Rockstart’s AgriFood demo day. At the time of joining the program last September, IBISA’s co-founder Jean-Baptiste Pleynet made mention of IBISA’s insurance, satellite and blockchain components, as well as of its potential to drive positive impact.
But Pleynet also emphasized an interesting point of synergy: “We believe our solution will be very valuable for the food industry to bring resilience to the supply chain and manage climate risks and we wanted to accelerate this path,” he explained.