Rahat Beema

Natural disasters continue to result in significant economic losses globally. In 2020 alone, natural disasters caused economic losses amounting to $210 billion(CRED). Regions that are prone to frequent natural disasters face a higher risk of being trapped in the economic poverty cycle. The World Bank estimates that approximately 26 million people are pushed into poverty each year due to natural disasters. Vulnerable populations in these areas experience the compounding effects of climate-related risks with a high risk of falling into an economic poverty trap.

There is a critical need to prioritize the adaptation of our economies to climate-related impacts. While extreme weather may not be controllable, risk management financial instruments such as insurance can mitigate the financial burden and play a crucial role in building resilience against climatic events. Unfortunately, insurance is not widely adopted due to issues with traditional insurance schemes. Low-income individuals and families are more likely to be uninsured or underinsured compared to higher-income counterparts. Traditional insurance schemes have costly premiums with lengthy and complex claims processes. Insurance works by pooling funds from individuals to offset risks and support the community. However, insurance companies have shifted from community-based models to centralized, single-entity models that prioritize profits over community benefits. This centralized approach leads to a lack of trust between insurers and their clients, due to cases of delayed and cumbersome claims payouts, as well as a lack of transparency on the data used to determine claims. Insurance funds are also depleted by administrative inefficiencies in risk and damage assessment and disbursement. Around 30% of insurance premiums are lost due to administrative inefficiencies in the system (McKinsey & Company).

Rahat is an open source blockchain based humanitarian assistance tool to support vulnerable communities (the unbanked and underbanked) get access to aid efficiently. While humanitarian assistance plays a critical role in providing basic necessities for survival, we are expanding our solution to help build financial resilience for such communities. Our expansion is a parametric microinsurance policy payout - Rahat Beema- which is designed to increase financial resilience of lower-income families.  The foundation of the platform is self-executing immutable smart contracts in blockchain which are encoded with the contract terms between the insurer and the company - that offers a means to guarantee direct payout after a qualifying event and protect against unpredictable but potentially devastating risks. The following description highlights the key components of Rahat Beema 1. 

1. Parameter selection - Insurance companies onboard insurers to Rahat platform with microinsurance policies with specific parameters or triggers (eg. weather conditions, seismic activity, or commodity prices) that, when met, will result in a payout.
2. Data monitoring - Rahat integrates smart contracts with various data sources, such as hydrologic data, IoT devices, and other relevant sources, depending on the type of parametric insurance. This data monitoring ensures real-time and accurate assessment of trigger events, enabling timely and objective payout determination.
3. Multi-sig trigger event - Rahat incorporates a multi-signature feature to verify trigger events from independent sources. Once a predetermined index or threshold is met or surpassed, the multi-signature confirmation validates the occurrence of the trigger event. This robust validation mechanism ensures the integrity and accuracy of the payout process.
4. Automatic payout -  When the trigger event is confirmed through multi-signature validation, Rahat's smart contracts automatically initiate payouts to the policyholders. The entire claim and disbursement process is governed by the smart contracts, eliminating the need for manual claims assessment or proof of loss. This automation significantly reduces processing time, making payouts quicker and more efficient. The automation also allows for lower coverage levels, making insurance more affordable and accessible to low-income families.

Rahat's blockchain-based infrastructure ensures transparency, immutability, and auditability of all insurance-related data and transactions. The use of blockchain technology eliminates administrative inefficiencies and provides a trustworthy system for policyholders, insurers, and regulators. It minimizes governance costs, streamlines operations, and increases the affordability and accessibility of coverage for vulnerable communities.

Rahat is dedicated to directly and meaningfully improving the lives of marginalized communities, specifically targeting low-income families, smallholder farmers, herders, migrant labor workers and vulnerable populations in regions prone to natural disasters. These communities are often underserved by traditional insurance schemes, leaving them exposed to significant financial risks and limited opportunities for recovery. 

The target population includes individuals and families who are economically disadvantaged and lack access to adequate insurance coverage. They often struggle to cope with the aftermath of natural disasters or other unforeseen events, as they lack the financial resources to rebuild their lives and livelihoods. The current insurance landscape overlooks these communities due to challenges of damage assessment in a cost-effective manner and thus, they fail to address their needs with costly premiums, and lengthy claims processes.

By providing accessible and affordable insurance coverage, Rahat helps vulnerable populations build financial resilience. In the face of natural disasters, climate-related risks, or other triggering events, policyholders can rely on Rahat's parametric microinsurance policies to receive direct payouts. This financial safety net empowers vulnerable populations to recover more quickly, break free from the cycle of poverty, and improve their overall resilience against future risks.

Our company has a diverse team of innovators working in the social impact space. We have over 4 years of experience in successfully developing blockchain solutions in humanitarian and agricultural sectors. We are a portfolio company of the UNICEF Innovation Fund (https://bit.ly/3M9YuqK), a Blockchain cohort focused on financial inclusion (https://uni.cf/3EeZcjz).

We have developed our solution in accordance with the Principles for Digital Development (https://digitalprinciples.org/) with close collaboration with humanitarian agencies, government stakeholders and local users. Rahat is also a certified digital public good. (https://digitalpublicgoods.net/registry/rahat.html)

We have worked with over 21 local community partners to support humanitarian aid distribution efforts to support over 16,000 beneficiaries in Nepal and Pakistan. We have specifically focused on marginalized communities who are prone to flood disasters in the Terai belt of Nepal. Such populations are low-income families - ranging from smallholder farmers, herders, daily wagers and migrant labor workers. With our partners, our team has conducted extensive field research and needs assessment to gather firsthand insights into the specific challenges faced by vulnerable populations. We run post distribution monitoring surveys and interviews with a selected percentage of the community to understand the impact of the solution and for a reiterative design of the solution. We collaborate with local organizations, government authorities to gain a deep understanding of the community context and dynamics. We organize focus group discussions, interviews and surveys to collect community input, ideas and feedback to support our decision-making process.

Rahat has reached over 16,000 beneficiaries in Nepal and Pakistan through aid assistance and who will ultimately benefit from the parametric insurance functionality. Currently, we are working on mapping out a pilot for the expanded functionality of Rahat Beema with 200 smallholder farmers in Nepal.

We strongly believe that collective action and collaboration can help bridge the gap and challenges of financial inclusion to support marginalized communities. We are constantly working to build partnerships with innovators and stakeholders in the space. Solve’s strong network can help Rahat forge strategic partnerships and gain access to markets and distribution channels, which can help us refine and scale our product with the right mentorship and funding. This will also enable us to connect with other innovators and experts in the field, providing us with the opportunity to collaborate with them and bring about meaningful change in the financial sector. We are also committed to designing our open source tool with the community.

We recognize that the technology we are working with, blockchain implementation for parametric insurance, is still in its early stages. That is why we are eager to investigate how Solve partners and communities are currently using this technology, particularly in the financial sector. We are also keen to learn about effective blockchain software development and project management, as well as examine successful blockchain projects in the financial sector to adopt best practices for our own project. Through Solve, we hope to showcase and share our experience of the impact of this technology in the humanitarian sector beyond cryptocurrencies. We believe this will help other emerging organizations explore and implement the technology for social and impactful change.

Moreover, we recognize that we also need to strengthen our metrics efforts and better demonstrate the impact of Rahat. We see Solve as an excellent opportunity to accelerate the pilot and implementation of our expanded functionality, Rahat Beema. Solve's vast network and resources can support us in expanding Rahat beyond Nepal, specifically to South/SouthEast Asia, and Latin America where populations are vulnerable to climate shock. We are interested in exploring distribution strategies to help us achieve this goal with the help of Solve.

Rahat Beema introduces a parametric microinsurance model that leverages blockchain technology and smart contracts. This approach shifts from traditional insurance schemes with lengthy claims processes to an automated and transparent system. The use of smart contracts with parametric triggers ensures direct payouts to policyholders after qualifying events, eliminating the need for complex claims assessments and reducing processing time. The decentralized nature of the blockchain provides a trustless environment, minimizing the need for intermediaries and reducing administrative inefficiencies. Oracle networks connect the blockchain to real-world data and validate that the event truly occurred, preventing any manipulation of the automated payment. Rahat also ensures the integrity and accuracy of the payout process through a multi-signature feature. Independent sources verify trigger events, and once a predetermined index or threshold is met, the multi-signature confirmation validates the occurrence of the trigger event. This robust validation mechanism enhances the reliability of payouts.

Thus, blockchain-based parametric insurance can revolutionize the insurance market by increasing coverage access for underserved populations, with quick and automatic payouts and  enhancing transparency and trust. By demonstrating the effectiveness of parametric microinsurance with blockchain technology, Rahat can inspire other organizations and insurance providers to adopt similar models. This can lead to the proliferation of affordable and efficient insurance solutions for vulnerable populations worldwide and catalyze broader positive impacts in the space. 

Rahat targets lower-income families and marginalized communities, addressing their specific financial resilience needs. Rahat can assist low income families to maintain a sense of financial confidence even in the face of significant vulnerability like climate shock. By providing affordable and accessible parametric microinsurance, Rahat aims to bridge the gap in insurance coverage for underserved populations. This focus on financial inclusion has the potential to uplift vulnerable communities, breaking the cycle of poverty and building their resilience against climate-related risks.

With Rahat Beema, our primary objective in the first year is to complete a pilot to provide access to insurance for 200 low-income individuals in Nepal, focusing on farmers and migrant labor workers. We aim to ensure inclusivity by targeting at least 30% female beneficiaries.

To achieve this impact, we will conduct outreach programs in a targeted Terai region in Nepal. We will work with local mobilizers, at least one insurance company and local government bodies to raise awareness about the significance of insurance coverage in mitigating financial risks against climate disasters. We will also partner with 2 agriculture cooperatives to reach out to the farmer communities of the targeted area.

Our 5 year goal is to enhance financial resilience against climate-related extreme events and inclusion of low income individuals by providing 250K beneficiaries with parametric insurance coverage using blockchain technology. We aim to expand to Bhutan, Pakistan and Singapore. For the geographical expansion, we will develop a dedicated team and develop a partnership network with insurance companies active in the target areas. We will also use the lessons learned from the initial pilots done in Nepal. However, to examine the usability of the system in other countries, we will first pilot in each new country and adapt our system based on community feedback for an inclusive build.

A comprehensive framework is very important to assess the effectiveness and impact of any project. To get insights on the services and the product, we collect regular data from beneficiaries and partners, which will then be used to refine and improve the platform and processes. For this project we will use the following indicators to monitor and evaluate the impacts.

1. Increased access to insurance for low-income individuals, specifically farmers and migrant labor workers, through Rahat, thereby minimizing risks associated with climate disasters. The percentage of low-income individuals who are insured will serve as a key indicator, reflecting the level of coverage provided to the target population. Additionally, monitoring the percentage increase in the number of insured farmers and migrants over time will provide insights into the project's success in expanding insurance access. Another important indicator is the reduction in economic shocks among insured individuals. By examining the frequency and severity of financial setbacks experienced by beneficiaries, the project can assess the effectiveness of the insurance coverage in mitigating these shocks and providing financial stability.
2. Ensuring equal access to insurance coverage for both men and women is a critical aspect of the project's goals. The percentage of insured individuals who are women serves as an indicator of gender equality in accessing insurance services. Furthermore, monitoring the project's impact on women's decision-making power and financial independence can provide insights into the empowerment of women through the provision of insurance coverage.
3. Enhancing transparency, accountability, and trust in insurance processes is another key objective. The ability to track insurance transactions on the blockchain is an indicator of the project's transparency and efficiency. Additionally, the effective resolution of insurance-related disputes and grievances will contribute to building trust among beneficiaries and stakeholders.
4. We will measure efficiency in insurance payout using indicators like difference in time taken for the beneficiaries to receive the claim amount and percentage of claims that are successfully settled will also be measured.

By regularly monitoring and evaluating these indicators, the project can assess its progress, identify areas for improvement, and make informed decisions to optimize the impact and outcomes of the initiative.

The theory of change for the project involves a series of activities, outputs, outcomes, and ultimately, the desired impact of enhanced financial resilience against climate-related extreme events and improved livelihoods of low-income individuals.

The project will focus on actively using learnings of the pilot to adapt Rahat Beema module iteratively as part of the build development. 

We will strengthen the capacity of implementation partners and beneficiaries with educational and training sessions. These sessions will play a crucial role in increasing knowledge and awareness of insurance among the target population, enabling them to understand the benefits of insurance coverage and its role in mitigating financial risks associated with climate-related events; as well as ease the processes and learning for insurance partners. 

The development of an enrollment and support mechanism is a key output of the project. This mechanism will simplify the enrollment process, making it accessible and user-friendly for the beneficiaries. It will also provide guidance and support throughout the enrollment period, ensuring that individuals receive the necessary assistance in understanding and enrolling in the insurance program.

As a result of these activities, several outcomes are expected. The first outcome is the financial resilience and livelihood of the targeted community. Through the provision of parametric insurance, individuals will have a safety net to protect themselves from financial shocks caused by climate-related extreme events. The automated process will also make the claiming process efficient because of which beneficiaries will receive the claims timely. This will increase financial resilience by enabling them to recover and rebuild their livelihoods.

Another outcome is the increase in transparency of insurance processes. The utilization of the blockchain technology in Rahat will enhance transparency in claims processing and settlement. This transparency will build trust among beneficiaries, insurance companies, and stakeholders, thereby improving the overall credibility and efficiency of the insurance system. Meanwhile the transparent ecosystem will help resolve disputes and grievances efficiently, if any.

Our solution utilizes blockchain technology, incorporating smart contracts for parametric insurance with predefined triggers and payouts based on objective data. These smart contracts will not only facilitate insurance processes but also have the capability to provide microloans. By leveraging the power of smart contracts, we can establish an efficient and automated system for granting microloans based on predetermined criteria. This feature expands the scope of our solution, offering financial inclusivity and empowering individuals with access to much-needed capital. Additionally, to feed trigger data into the smart contracts, we design oracle services that act as intermediaries between the off-chain world and the blockchain, ensuring accurate and reliable data integration. Integration with IoT devices will further enhance the system's reliability and reduce the possibility of human error.

In order to cater to beneficiaries who may not have access to smartphones, our solution incorporates SMS technology as a means of communication. Through SMS, we engage with these individuals and provide them with a custodial wallet service that enables them to interact with the blockchain. This approach ensures inclusivity and accessibility, allowing a wider range of beneficiaries to participate in the system. By combining blockchain technology, smart contracts, weather-indexed microinsurance, and SMS capabilities, our solution offers a comprehensive and inclusive approach to addressing the needs of individuals in need of insurance and financial services.

Our company is committed to promoting diversity, equity, and inclusivity in all aspects of our work. As a women-led organization with over 50% of women in leadership positions, we strive to build a culture that is welcoming and supportive to all. We prioritize hiring practices that encourage women and offer employment opportunities for marginalized communities, including indigenous populations. by partnering with organizations like the TEJ foundation (https://www.tejcenter.org/)  to recruit and support employees from underrepresented communities. Our equal employment opportunity policy and diversity inclusion policy guide our recruitment and HR management process to ensure that we are fostering an inclusive environment for all employees.

Our value proposition is on providing insurance coverage to the disadvantaged communities that are more susceptible to climate-related shocks and have limited access to micro-insurance options. To achieve this, through our solution we incorporate parametric insurance linked to local weather conditions with smart contracts on a blockchain. This enables insurance providers to increase transparency for underprivileged customers and decrease payout times for eligible policies through streamlined back-end integration. In terms of impact, parametric insurance provides coverage for risks that are difficult to model and insure through traditional insurance products, such as climate-related risks, natural disasters, or pandemics. This can help the underprivileged protect their assets and livelihoods, and reduce their vulnerability to catastrophic events that could otherwise lead to financial ruin.

The key activities will include capacity building of implementation partners and beneficiaries; building out policy packages and refining the technical build from learnings of the pilot. We will work with partner insurance providers to recruit potential underprivileged insurance holders who will purchase micro insurance policies. Therefore, the cost will be involved in capacity building, customer awareness and onboarding.  

We have developed a Software as a Service subscription model where we support implementation partners with technology customization fee and consulting. Our revenue streams will also depend on grants, philanthropic donations for public goods and crowdfunding. Since we work with low-income households, service fees from policyholders could create more barriers for adoption, so our open source tools will at no cost for the underserved.

We will bring in revenue through support for implementation partners- we will offer a SaaS subscription model to partners, such as insurance companies, NGOs who can benefit from Rahat's technology customization, support, and ongoing updates. In addition to the SaaS subscription model, Rahat can generate revenue through technology customization fees. This fee can be charged to implementation partners who require tailored modifications or additional features to align the platform with their specific needs.Rahat will actively seek grants and philanthropic donations from organizations and foundations that are committed to promoting financial inclusion and supporting public goods.. These funds will cover operational costs, research and development, and scaling the platform's impact. By securing grants and donations, Rahat can offer its services at no cost to the underserved, eliminating financial barriers to adoption.

We raised an equity free investment of USD100K from UNICEF Office of Innovation in 2021 to develop Rahat as an open source Digital Public Goods product. https://www.unicefinnovationfund.org/broadcast/updates/rahat-tokenized-aid-distribution-platform-support-vulnerable-communities 

We recently conducted quadratic crowdfunding to raise USD 20K in the alpha round. https://www.gitcoin.co/blog/gitcoin-unicef-qf-collaboration-pilot 

We conducted cash and relief distribution for 1,900 households in Jaleswar, Nepal for UNICEF Nepal through Rahat. The revenue for the project was USD64K.  https://www.unicef.org/nepal/stories/digital-solution-emergency-cash-transfers