Publication: Managing Agricultural Risk at the Country Level : The Case of Index-Based Livestock Insurance in Mongolia
Date
2007-08
ISSN
Published
2007-08
Author(s)
Mahul, Olivier
Skees, Jerry
Abstract
This paper describes the index-based
livestock insurance program in Mongolia designed in the
context of a World Bank lending operation with Government of
Mongolia and implemented on a pilot basis in 2005. This
program involves a combination of self-insurance by herders,
market-based insurance, and social insurance. Herders retain
small losses, larger losses are transferred to the private
insurance industry, and extreme or catastrophic losses are
transferred to the government using a public safety net
program. A syndicate pooling arrangement protects
participating insurance companies against excessive insured
losses, with excess of loss reinsurance provided by the
government. The fiscal exposure of Government of Mongolia
toward the most extreme losses is protected with a
contingent credit facility. The insurance program relies on
a mortality rate index by species in each local region. The
index provides strong incentives to individual herders to
continue to manage their herds so as to minimize the impacts
of major livestock mortality events; individual herders
receive an insurance payout based on the local mortality,
irrespective of their individual losses. This project
offered the first opportunity to design and implement an
agriculture insurance program using a country-wide
agricultural risk management approach. During the first
sales season, 7 percent of the herders in the three pilot
regions purchased the insurance product.
Link to Data Set
Citation
“Mahul, Olivier; Skees, Jerry. 2007. Managing Agricultural Risk at the Country Level : The Case of Index-Based Livestock Insurance in Mongolia. Policy Research Working Paper; No. 4325. © World Bank, Washington, DC. http://hdl.handle.net/10986/7273 License: CC BY 3.0 IGO.”
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