Mahul, OlivierSkees, Jerry2012-06-062012-06-062007-08https://hdl.handle.net/10986/7273This 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.CC BY 3.0 IGOACCIDENTACCOUNTINGADMINISTRATIVE COSTSAGENTSAGRICULTURAL INSURANCEAGRICULTURAL PRODUCTIONATTACHMENT POINTBANK LENDINGBANK POLICYBANKSBASIS RISKCAPITAL GAINSCAPITAL INVESTMENTCAPITAL MARKETSCAPITAL REQUIREMENTSCAPITALIZATIONCATASTROPHE BONDSCATASTROPHESCATASTROPHIC EVENTSCATASTROPHIC INSURANCECATASTROPHIC LOSSCATASTROPHIC LOSSESCATASTROPHIC RISKSCOINSURANCECOLLECTIVE ACTIONCOLLECTIVE ACTION PROBLEMCOMPETITIVENESSCOMPULSORY INSURANCECONDITIONS OF COVERAGECONSUMERSCONTINGENT DEBTCONTINGENT LIABILITIESCORPORATE INVESTMENTCOUNTRY RISKCREDIBILITYCROP INSURANCECROP INSURANCE SCHEMEDAMAGESDEATH RATESDEBT BURDENDEFAULT RISKDEPOSITDEVELOPING COUNTRIESDISASTERDISASTER AIDDISASTER ASSISTANCEDISASTER EMERGENCYDISASTER RECONSTRUCTIONDISASTER REHABILITATIONDISASTER RELIEFDISASTER RESPONSEDISASTER RISKDISASTERSDISBURSEMENTDIVERSIFIED PORTFOLIODROUGHTDROUGHTSDUE DILIGENCEEARTHQUAKEEARTHQUAKE INSURANCEEARTHQUAKESEMERGENCY RELIEFEQUIPMENTERLEXCESS OF LOSS REINSURANCEEXPENDITURESEXTREME EVENTSFAIR PRICEFARMERFARMERSFINANCIAL EXPOSUREFINANCIAL INTERMEDIARIESFINANCIAL MARKETSFINANCIAL SERVICESFINANCIAL SUPPORTFISCAL BURDENFISCAL CONSTRAINTSFLOODSFOOD SECURITYFRAUDGOVERNMENT SUPPORTSGRACE PERIODHEALTH INSURANCEHOUSINGINDEMNITIESINDEMNITYINDEMNITY PAYMENTSINFORMAL LENDERSINFRASTRUCTURE LOANSINSURANCEINSURANCE AGENTSINSURANCE CLAIMSINSURANCE COMPANIESINSURANCE COMPANYINSURANCE CONTRACTSINSURANCE COVERAGEINSURANCE FUNDSINSURANCE INDUSTRYINSURANCE LAWINSURANCE MARKETINSURANCE PENETRATIONINSURANCE POLICIESINSURANCE POLICYINSURANCE POOLSINSURANCE PREMIUMINSURANCE PREMIUMSINSURANCE PRODUCTINSURANCE PRODUCTSINSURED LOSSESINSURERINSURERSINTEGRITYINTEREST RATESINTERNATIONAL AGENCIESINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINVESTMENT DECISIONSLAWSLEGAL ENVIRONMENTLENDING INSTRUMENTSLIABILITYLIABILITY INSURANCELINE OF CREDITLIQUIDITYLOANLOAN TERMSLOCAL GOVERNMENTLOSS RATIOMARKET SHAREMARKET SHARESMICRO FINANCEMICROFINANCEMITIGATIONMITIGATION MEASURESMORAL HAZARDMORAL HAZARDSMULTILATERAL DEVELOPMENT BANKSNATURAL DISASTERSNATURAL HAZARDSNON-LIFE INSURANCEOPERATING COSTSOPPORTUNITY COSTSPLEDGESPOOR FARMERSPORTFOLIO REINSURANCEPREMIUM PAYMENTSPREMIUMSPRIVATE CAPITALPRIVATE INSURANCEPRIVATIZATIONPROFITABILITYPROGRAMSPROPERTY INSURANCEPUBLIC INSURANCEPUBLIC INVESTMENTPUBLIC SAFETYREINSURANCE AGREEMENTREINSURANCE CAPACITYREINSURANCE COMPANIESREINSURANCE CONTRACTREINSURANCE MARKETSREINSURANCE PREMIUMSREINSURANCE TREATYREINSURERREINSURERSRELIEFRESERVERESERVE FUNDRESERVE FUNDSRESERVESRESOURCE ALLOCATIONRETURNRISK ANALYSISRISK ASSESSMENTRISK CAPITALRISK EXPOSURERISK EXPOSURESRISK MANAGEMENTRISK MANAGEMENT MODELRISK MANAGEMENT STRATEGIESRISK MITIGATIONRISK NEUTRALRISK PROFILERISK PROFILESRISK SHARINGRISK TRANSFERRURAL FINANCERURAL FINANCE SECTORSAFETYSAFETY NETSAFETY NETSSAVINGSSETTLEMENTSOCIAL SAFETY NETSSOLVENCYSTOP LOSS REINSURANCESUPERVISORY AGENCYSUPERVISORY FRAMEWORKSUSTAINABILITYTAXTAXATIONTECHNICAL ASSISTANCETIMELY PAYMENTTRANSACTIONTRANSACTION COSTSTRANSPARENCYUNDERWRITINGWEATHER EVENTSWorld Bank10.1596/1813-9450-4325