Mongolia

The idea of using mortality index insurance to insure against livestock losses from natural disasters was first proposed by GlobalAgRisk in 2001, as part of a World Bank project. At that time, Mongolia had recently experienced massive livestock losses resulting from severe winter conditions that left many herders in a desperate situation. GlobalAgRisk designed the Index-based Livestock Insurance (IBLI), basing the insurance payments on estimates of aggregate livestock mortality rates by species at the county level, as calculated by the Mongolian National Statistics Office. The IBLI policy couples a commercial product for moderate to large livestock losses and a social safety net for catastrophic losses through a public-private partnership between private sector insurance companies and the government of Mongolia. Unique financing arrangements pool the risk among participating insurers and ensure that sustainable and secure financing is in place to make all insurance payments in the event of extreme livestock losses. The IBLI design received the World Bank 2006 Golden Plough Award for Innovation as the world’s first index-based livestock insurance program.

 

In 2005, the IBLI pilot was instituted in three provinces, which began the process of transitioning IBLI to a self-sustaining, nationwide, program. In 2010, nearly 7,000 herder households in nine provinces purchased the insurance.  Uniquely among index insurance projects, truly catastrophic conditions have tested the integrity of the IBLI program. Shortly after its launch, the program was hit by three consecutive years of high livestock losses, with 2010 being the worst year in recent history. Despite severe losses, insured herders received the full indemnities due and the insurance companies have remained committed to the program. International reinsurance was obtained in 2010. As of 2012, project has been scaled nationally and is on offer in all 22 provinces of the country. GlobalAgRisk continues as the lead consulting firm to the government of Mongolia for the implementation and expansion of the IBLI pilot program.

News:

Further Reading:
Piloting Index-based Livestock Insurance in Mongolia
Mahul and Skees
2006
Download
Managing Agricultural Risk at the Country Level: The Case of Index-based Livestock Insurance in Mongolia
Mahul and Skees
2005
Download
Index-based Livestock Insurance in Mongolia: Potential Impact on Financial Sector Development
Goes
2005
Download
Examining the Feasibility of of Livestock Insurance in Mongolia
Skees and Enkh-Amgalan
2002
Download