Blockchain solutions are setting a new foundation for microinsurance
4 min readJun 16, 2021


Blockchain solutions are setting a new foundation for microinsurance. The goals are simplifying the claiming process and approaching more customers.

Blockchain solutions-NEW

Microinsurance models with small premiums are very beneficial for low-income people, mostly farmers in developing countries. However, both the insurance companies and the farmers showed little interest in this model due to factors such as low-profit margins, high operation costs, and complex payment processes.

Some analysts believe that the growth of digital transformation and blockchain solutions is bringing new opportunities to turn microinsurance into a new phase. Accordingly, when designing a reasonable blockchain and smart contracts model, microinsurance will become a business with the potential for sustainable and profitable development.

Determine the essential of digitization in microinsurance

The underdevelopment of microinsurance can be attributed to two reasons. One explanation is that insurances in microinsurance are struggling to find a solution to the problem of balancing costs and profits. The other is the apprehension of the customers about the claim process.

Indeed, the profit margin of microinsurance is quite low with high operating costs. So, the problem of the insurers lies in the problem of the number of contracts sold. Meanwhile, the complicated insurance claim process and small compensation costs have limited customers’ motivation to participate in the service.

Fintech is also growing very fast around the world. According to market research company IDC, fintech is predicted to grow at a CAGR of 25% through 2022 with a market value of $309 billion. And blockchain solutions are gaining a great reputation for this development.

This situation forces insurance companies to change their approach and business model based on new technologies.

Adopting blockchain solutions and smart contracts as the underlying technology in microinsurance

In this use case, insurers will use smart contracts to design and automatically execute contract agreements. These smart contracts will then be stored on a blockchain network to make them secure and transparent.

In the traditional model, the customers will have to send a claim request and insurers have to send a surveyor to the field. It can be an exhausting process.

The preeminence of blockchain solutions is in the automation of the process. Humans will only join in the setting condition stage. When the damage happens, if presetting conditions are met, customers will receive compensation without claiming.

Also, this blockchain microinsurance model uses parametric insurance, a type of insurance under which the amount of damage compensation is determined by a pre-agreed loss measurement index (e.g. earthquake intensity, rainfall density). This type of insurance is different from traditional insurance, which usually pays compensation based on determining actual losses.

Hence, this solution is the best fit with disaster insurance for farmers, in which the success of a crop is greatly influenced by weather and natural factors. And the farmers also have a low budget for insurance.

In addition, farmers often find it difficult to access formal financial lending institutions such as banks due to strict terms and they will look to other sources of lending such as usury. Using blockchain and smart contracts, insurance companies will open up a new microinsurance market, giving farmers easier access to formal financial benefits.

Using ready-made blockchain solutions by akaChain to accelerate the race

Companies will have to spend huge amounts of money for full investment in new technology. So instead of spending too much money on developing one solution, companies can use akaChain’s ready-made blockchain solutions to save costs.

In addition, with the experience of implementing many blockchain solutions before, akaChain can give practical advice to implement a more suitable solution for your company.

Now that microinsurance is no longer just a socially responsible endeavor, microinsurance is catching opportunities for a more commercial purpose.

About akaChain

akaChain is backed by FPT Software, a globally leading technology, and IT services provider. It is an end-to-end, permissioned, multi-chain network based on the Hyperledger Fabric. Since its establishment in September 2018, akaChain’s product has assisted many enterprises, from SMEs to Fortune 500 firms, to transform with distributed ledger technology. The company provides a broad range of permissioned blockchain-based products and services in multiple sectors, including retail, supply chain, banking and finance, insurance, shopping mall management, etc. to transform with its distributed ledger technology. For more information, please visit

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