Ground truth and basis risk

Index insurance fails when the satellite misses a drought on one plot. Sensors in the soil close that gap.

Weather index insurance pays out when a satellite measure crosses a threshold, with no slow loss assessment. Its weakness is basis risk: the index can miss a drought on a single plot, and a farmer who lost everything receives nothing.

Soil readings from the plot itself let insurers and lenders set triggers that match what farmers actually live through. That makes the network worth paying for at the level of the lender, so the farmer does not carry its cost.