At Arbol, Data Is The Decision Maker

November 20, 2021
Arbol logo over computer code.Arbol logo over computer code.

What sets Arbol apart from traditional insurers is that our weather risk platform is parametric. What does this mean? It means that contracts are paid out based on data as opposed to a subjective claims process where a human adjuster comes to your home or businesses to assess the damage. This is important because the subjectivity, loopholes, delays, and potential for fraud that are seen all too often with traditional insurers are eliminated for our clients. Once the threshold for loss in a contract is triggered by the applicable dataset an agreement is structured on, the client gets paid automatically. It’s that simple.

Parametric insurance creates a whole new ballgame. A lengthy claims process can leave individuals or businesses in a prolonged liquidity crunch waiting for a much-needed payout. In some cases, an insurer will invoke an exception clause to avoid a payout altogether.

This has been especially true in the age of COVID-19, as businesses large and small have been stiffed by insurance companies who have claimed that they are exempt from paying out customers for pandemic related business interruptions. Many restaurants, who would have depended on a payout from their insurers to stay afloat during this period of historic hardship have not been able in many cases to outlast the claims process, opting instead to permanently close their doors.

No business should be forced to suffer economic ruin or face the prospect of permanent closure because their insurer didn’t come through for them. This is why Arbol is committed to using data to bring transparency and efficiency to the weather risk market.

The Importance of Objective Data

Trusted, secure, and tamper-proof data serves as the foundation of every weather risk contract that we structure at Arbol. We use a variety of public and private sources to obtain weather data, including government institutions such as NASA and the National Oceanic and Atmospheric Administration (NOAA).

Arbol takes it to the next level when it comes to objectivity and transparency. Not only do we use public, uncontested data to determine payouts, we build systems that calculate those payouts in an open and fully auditable execution environment. Using blockchain technology, Chainlink, and the IPFS-powered dWeather project, Arbol makes it so you can get a full view of how your contracts are being calculated. And the technologies that underlie this system offer cryptographic guarantees that there is no tampering or human interference. Everything is done out in the open, so you know exactly what you are getting and why.

Objectivity and data are what set Arbol apart. The massive flaw that exists in the claims process we see with traditional insurers is that it is not objective. If your business or residence were to be flooded, a human adjustor that works for the company that would ultimately be on the hook for your settlement is tasked to determine how extensive they believe the damage is. This is not only a process that is rife with conflicts of interest, but it can take time to be fully resolved for the client who on top of everything else, is worrying in the meantime what will happen if their insurer doesn’t come through.

Now, imagine if we eliminated the human adjustor from the equation altogether and let an unbiased third-party determine when you get paid.

At Arbol, data replaces the human adjustor. The client selects the triggers for loss at the beginning of their coverage period, and if the triggers for loss are met, they get paid. Arbol cannot tamper with the data. Arbol cannot change the terms of the agreement once it’s in force. And Arbol cannot claim an exemption that does not exist.

The terms of the agreement are transparent to both Arbol and the client during the coverage period. At the end of the day, the data is the decision maker.

Efficiency and Transparency

Insurance is a key piece of financial infrastructure that allows businesses to grow and thrive without having to worry that they are one disaster away from financial ruin. But the problem that insurance exists to solve at its core is not fully resolved if the client does not have the assurance at the end of the day that they are truly covered. This is why Arbol’s central mission is to introduce efficiency and transparency to the weather risk marketplace.

Efficiency gives the client the assurance they will be paid quickly and fairly if the triggers for loss in their contract are met. Transparency gives the client a full understanding of what their coverage looks like so they can grow their business knowing certain risks are accounted for. In emerging markets, transparency takes on even more importance with lower levels of institutional trust and a history of insurance policy holders having difficulty getting paid for legitimate claims.

External risk is always a factor that businesses need to price into their balance sheets. Businesses whose revenues are exposed to the weather, that face external risk from disaster events such as hurricanes and wildfires, and that are generally vulnerable to the unpredictability of nature don’t just have the power to manage climate risk.

With Arbol, they have the power to build true resilience into their balance sheets.

About Arbol

Arbol Inc. is a software platform that connects end-users with innovative weather risk management solutions at lower cost. Arbol is reshaping the weather risk market by combining Big Data, machine learning and Smart Contracts to give end-users the assurance they will be paid quickly and fairly when adverse weather causes losses.


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