Team Interviews: Michiel Berende, Etherisc’s Inclusive Insurance Lead

Welcome to the second part of our Team interviews. We kicked the series off with Alpen Sheth, Etherisc’s Head of New Product Design, and today we continue with Michiel Berende, who’s heading our inclusive insurance business initiatives.

“In developing countries insurance is the difference between a normal life and poverty.” — Michiel Berende, Etherisc

Michiel started learning about the true essence of insurance in 2004 when he got a job in a microfinance organization in India. In developing countries, insurance can literally mean the difference between a normal life and living in poverty.

Unfortunately, only less than 10% of the population in emerging economies have access to financial services. When Michiel learned that the blockchain technology offers the opportunity to include the financially excluded, he decided to dedicate all his time to develop a solution.

Michiel is also a Co-founder of RISKebiz Inclusive Finance Blockchain Solutions — a blockchain solutions provider for insurance companies. He has now joined Etherisc’s mission to truly bring insurance to everyone.

Hi, Michiel. A little warm-up question to get things going. What has Michiel Berende’s career path been like so far?

I’m originally from the Netherlands. I started my career as an underwriter and process manager for a Dutch insurer. It’s how I got involved in microinsurance from the very start of my professional path. During my first job, this path took me to India in 2004. Our task was to support a microfinance organization and help it set up its microinsurance activities, where I helped with looking for the right insurance technology.

It was a life-changer for me. It inspired me to quit my corporate job and move to India with my girlfriend. I landed a job at Tata-Dhan Academy, where I established a knowledge center for insurance. We stayed there for about two years. In the meantime, I became a member of the Microinsurance Network (back then, it was known as the CGAP Working Group on Microinsurance). In hindsight, it was a sort of a pivotal period for me. When we came back, I decided it was time to start out on my own.

As a freelance consultant based in the Netherlands, I worked with various types of organizations like the Microinsurance Network, PharmAccess Foundation, International Labour Organization, German Federal Enterprise for International Cooperation (GIZ), Inter American Development Bank (IADB), and others. Though my professional setting changed, my focus remained on microinsurance and technology.

I did a number of landscaping studies and reviewed many software systems applied in the microinsurance context and the same problems kept rising to the surface. Microinsurers were unable to properly scale, partially because they needed proper software, which was usually just too expensive. For large insurers, operational expenses are often too high to make a microinsurance product sustainable.

Then in 2013, I learned about Bitcoin. I was intrigued by how it made possible small transactions of value, instantaneously and inexpensively without the need of a third party. Only later, I learned that Bitcoin was just the tip of the iceberg and that the blockchain technology was the enabler. But the main thing that got me excited was the possibility of automating certain insurance processes. That’s when I decided to dedicate all my time to development of blockchain solutions for inclusive finance.

And how did you find yourself working with Etherisc?

To be honest, I found out about Etherisc when I did a competitor analysis in my role as a co-founder of RISKebiz. Then last year, I had a meeting in Berlin with one of Etherisc’s advisors, Tobias Noack. He found me on LinkedIn and read about RISKebiz. I shared my ideas with him and he told me about Etherisc and noticed that they actually had similar ideas. One thing led to another and after talking to Etherisc’s founders, Christoph and Stephan, I joined the team.

What makes me happy about this is the blockchain community spirit and the people who really want to fundamentally change the financial industry. And that spirit is baked into Etherisc. This was my chance to actually do something different. Include those who are currently financially excluded.

What’s your role inside Etherisc?

Well, currently I’m helping with inclusive insurance, more specifically crop insurance. For me, it is a logical continuation of all the work I have done during the previous 15 years. I’m involved in different projects around the world. For example, we’re working on a crop insurance model for Sri Lankan farmers. We are also in talks with a country in Southeast Asia and with some parties in the Philippines that provide index insurance. We offered them to automate one of their products to show the benefits of doing insurance on blockchain.

There’s also a project here in Europe. We’re setting up a private product partnership with a German organization. We’re talking to multinationals to see if we can develop an insurance product that wouldn’t be paid by the farmers but by corporations. The highest levels of value chain would create risk pools that bring benefits to small-scale farmers.

The point here is that it’s in the multinational’s interest, let’s say from the food industry, that the farmers are insured. Because they rely on the farmers who supply them with high-quality products in the predefined time frames. If a disaster strikes, the whole value chain is disrupted for an undefined period of time. Small-scale farmers in developing countries don’t have the means to pay for damages caused by such events. Thus, they are just left with nothing afterward. On the other hand, multinationals have to find new suppliers, which can be a lengthy and costly process. So this would be of mutual interest.

We’re also working on an index-based insurance product for Colombian farmers. We hope it could be completed by June this year. So, yes, quite a lot is going on.

The insurance for Colombian farmers, please tell us more. This is similar to the work Alpen is doing with Puerto Ricans?

Alpen and I are definitely discussing how we could join forces since he’s also looking into index crop insurance. The thing with insurance is that it is tailored to the Western world. People there understand the concept. Whereas, if you look at Asia, Africa, and Latin America, less than 10% of people have an insurance. And there are several reasons for this:

They don’t understand the concept of insurance or the concept of paying a premium for something that may or may not happen.

They don’t have a bank account.

They may have some savings but usually, they can’t afford insurance.

Having insurance for these people can mean living above or below the poverty line. And I can believe it. I have seen it. They are really caught in a vicious circle. You have almost 500 million small-scale farmers worldwide (that’s around 70 percent of the population of the EU and almost twice the population of the US!) that produce food for around two billion people and do not have access to insurance.

If you can find a solution, where these farmers can get access to insurance in case something happens, you can prevent them from falling into debt and help them restore the situation. This way they can also improve the quality and quantity of food produced. And if you take into account the growing population, increase in food production is something that has to happen. This is the thing I’ve mentioned before that I’m discussing with multinationals.

The inability of traditional insurance to cater to these groups is basically Etherisc’s raison d’être. Where do you see the difference that blockchain brings to insurance?

I see it as a combination of blockchain, IoT, and AI. One of the problems of insurance, especially inclusive insurance, is the lack of data. Now you have IoT that can provide the data that has not been available before. Think of small sensors in the fields, for example. Then, you have AI that can interpret this data. Finally, you have the blockchain technology that can transfer value from A to B, once the data has been provided. That is something that makes possible the changes, which were not possible before.

To wrap it all up, what do you see as the biggest challenges for Etherisc to address in the following years?

I think it will be the willingness of traditional parties to step into this new technology. There is an issue when you talk about blockchain, people immediately associate it with Silk roads and other illegal activities. People still have a negative attitude to crypto and the blockchain technology. Moreover, there are still a lot of levels in traditional organizations. If you talk to a person, who is in charge of innovations, it will take a long time before this decision goes through all the levels. At least, that is my personal experience.