From Verified Data to Risk-Based Pricing: An Applied Risk Analytics and Blockchain Necessity Framework for Agricultural and Property Insurance

Insurers increasingly seek to replace self-reported underwriting data with verified data, from satellite and IoT monitoring in agriculture to digital-identity credentials in property insurance. Distributed ledger technology (DLT, “blockchain”) is often proposed as the natural verification layer, but this proposition is rarely tested in economic terms. This paper develops a Net Advantage of Verification (NAV) and Blockchain Net Value (BNV) framework. It decomposes a verified-data architecture into four value components, net of five cost components. It then compares a status quo (S0), the best feasible non-DLT architecture (S1) and a DLT architecture (S2). The framework is applied to two Bulgarian cases: a behavior-based agricultural product (Pay-as-you-Farm) and EUDI-Wallet-enabled property insurance. All monetary inputs are illustrative assumptions, not observed data. Under this illustrative parameterization, BNV is negative in both cases at the base case and in most simulated scenarios. Within the stated ranges, a well-governed non-DLT architecture is therefore more economical. The result demonstrates the method and is not an empirical estimate for the Bulgarian market. The paper derives the conditions under which the sign could reverse, proposes a validation protocol and discusses implications for EU regulators and insurers. The framework transfers to other markets, whereas the numerical results require recalibration.