Blockchain can fix India’s dysfunctional insurance scheme, says WEF

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Blockchain technology in general and smart contracts in particular can “unlock the hidden values of legacy digital systems,” according to the World Economic Forum, or WEF. To understand how, look no further than India’s Crop Insurance Scheme. 

In a 40-page white paper released on Wednesday, the Geneva-based organization promotes the importance of interoperability between legacy systems and distributed ledger technologies – but only for specific use cases that are suitable for blockchains.

The WEF says:

“Once readers have already established that blockchain is desirable for their specific use case and business processes, this paper aims to spotlight the role of blockchain, smart contracts and oracles in accelerating the automation of such processes.”

Although the paper promotes highly technical and abstract solutions for enhancing interoperability between blockchains and legacy systems — which it calls the “interoperability bridge” — it provides a tangible example in the form of India’s Crop Insurance Scheme, which was devised in 2016 as a way to provide insurance coverage and financial support to farmers affected by natural disasters.

Issues ranging from transparency and accountability to corruption and information security were all raised by agencies involved in implementing the scheme. The white paper identifies how blockchain-based smart contracts and oracle systems could overcome these challenges.

The paper reads:

“The crop insurance programme serves as an apt case to highlight the current deficiencies most legacy systems face when dealing with multiparty business processes.”

It continues:

“If an organization’s objective is to automate business processes in a decentralized and disintermediated manner for various reasons, then a blockchain‑based architecture becomes imperative.

Indian regulators have had mixed feelings about cryptocurrencies, but they’ve been far more receptive to blockchain technology. Earlier this year, the National Institution for Transforming India, a government entity, released a report that explores the role of blockchain in improving business, social and governance outcomes in the country.