Application of RWA in Taiwan's Agricultural Insurance: Based  on Parametric Contracts and Decentralized Liquidity

Shun-Ming Chang; PAI-LUNG CHOU; MENG-HSIANG HSU

Authors

Shun-Ming Chang College of Management, National Kaohsiung University of Science and Technology, Taiwan
PAI-LUNG CHOU Department of Risk Management and Insurance, National Kaohsiung University of Science and Technology, Taiwan
MENG-HSIANG HSU Department of Information Management , National Kaohsiung University of Science and Technology, Taiwan

Keywords:

Real-World Assets (RWA), Agricultural Insurance, Parametric Insurance, Smart Contracts, Climate Risk

Abstract

Over the past several years, the accelerating impact of global climate change has left

Taiwan’s agriculture increasingly vulnerable to the risks of extreme weather phenomena

including typhoons, torrential rains, and cold surges, leading to high economic losses. While

conventional agricultural insurance is subsidized by the government, it consistently

experiences three primary problems: high loss adjustment costs, delayed claim settlements, and

low underwriting appetite in the reinsurance market. This study aims to explore the feasibility

and application framework of deploying Real-World Asset (RWA) tokenization technology in

Taiwan's agricultural insurance system. In this research, an "RWA Parametric Agricultural

Insurance Model" is suggested that integrates Internet of Things (IoT) meteorological data,

blockchain smart contracts, and Decentralized Finance (DeFi) liquidity pools. Thanks to a

tokenization model involving agricultural insurance policies and claim capital pools, smart

contracts can be used by these systems so as to achieve truly objective and automated "second

level settlements." Moreover, Taiwan’s agricultural risks can be bundled into an RWA financial

package to raise global Web3 market reinsurance capital, addressing the shortage of domestic

capital momentum. Thus, this study concludes that the RWA model reduces adverse selection

and moral hazard effectively, offering a practically valuable innovative path to the digital

transformation of agricultural finance in Taiwan.

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