Frequently Asked Questions

FAQ's

With crop insurance, you are insuring against losses in production at your farm. Assessing such losses is mostly done by a human adjuster visiting your farm. The reliance on human based loss assessment leads to delays and high operational costs, and the subjective nature of the assessment can create disputes between farmers and insurance companies which most farmers cannot afford to pursue in court. Finally, crop insurance is subject to moral hazard – unless it is mandatory, only farmers with marginal lands or poor farming practices will sign up, leading to high premiums for all participants. 

Such issues have led to crop insurance being unavailable or prohibitively expensive in most countries, with the US sustaining a large program only due to billions in annual subsidies. Even in the US, the crop insurance options for many specialty crops outside of the major crops (corn, soybeans, wheat) are sparse or nonexistent. Outside of the US, crop insurance is largely unavailable in many countries, leaving farmers to the mercy of unpredictable weather.

With Arbol, you are hedging against specific weather events that would negatively affect your crop — for example, rainfall levels below 20mm in September. Contracts on the Arbol platform pay based on weather data, not a human adjuster coming to your business or farm. 

The Arbol concept is scalable across regions and weather risk types beyond agriculture such as heat spikes for utilities or wind speed for renewable energy.

There exist some limited insurance policies that pay based on weather outcomes, known as parametric weather insurance. Parametric insurance is faster and simpler than traditional insurance, but still suffers from high operational costs and lack of transparency. Arbol leverages blockchain and smart contracts to sharply reduce operational costs by allowing users to create automated contracts that pay based on data.

No. Anyone can use Arbol. It is estimated that over 70% of all business operations are affected by weather. We have identified specific use cases for weather risk hedging in the energy, manufacturing, shipping, and mining spaces, for a start.

Fraud, corruption, delays, and inefficiencies are problems that have consistently plagued insurance efforts across the world.  Arbol leverages blockchain and smart contracts to provide financial compensation for unexpected weather in a transparent and automated manner. Blockchain also allows operational costs to be reduced substantially from the currently high operational cost burdens that plague the insurance industry. 

No. Arbol users get the benefits of reliability and transparency associated with blockchain without having to interact with it directly. Part of our product is a secure layer between the blockchain and the user. Arbol is as easy to use as an online banking site — hopefully easier!

No. Arbol’s users have no exposure to ether prices, or to any other cryptocurrencies. Depending on the customer’s needs and location, customers’ smart contracts will use either a USD pegged stablecoin, a currency placeholder, or a stablecoin pegged to some other currency or commodity.

Arbol has been built according to the principle of security by design. Rather than rushing to deliver a product, then worrying about security later, our product has been engineered to be secure from the beginning. Best practices are followed in all matters related to user accounts, bank interactions, and blockchain identity management. Weather data is signed and posted to the blockchain to prevent tampering.

Arbol uses cutting edge data feeds for rainfall, temperature, and other weather indexes. These datasets are compiled from on-the-ground weather station instrumentation readings and/or satellite readings, depending on the dataset. NOAA is generally considered the canonical authority for weather outcomes by scientists, governments, and private organizations, but we offer other options as well.

Weather futures mostly have little liquidity and are not used widely for agricultural weather risk. Futures contracts have specifications which are too standardized to be useful to manage local weather risk exposures. Arbol’s key benefit is that it enables hyper-local weather protection customized for very specific customer needs.

If you want to use Arbol to build financial protection against bad weather for your farm or business, please fill out the form for the pilot program.