WG M

1. © CommNet 2013
Index Based Livestock Insurance Scheme
Enkhtaivan G.
CEO
AGRICULTURAL
REINSURANCE JSC

2. © CommNet 2013
Content
1. Introduction on Agricultural Reinsurance JSC
2. Index Based Livestock Insurance Scheme
3. Results on Index Based Livestock Insurance

3. © CommNet 2013
1. Introduction on Agricultural
Reinsurance JSC

4. © CommNet 2013
• In accordance to the “Index Based Livestock Law”,
Agricultural Reinsurance JSC has been established by
the Government of Mongolia’s order number 280 that
dated August 28, 2014.

5. © CommNet 2013
• The main purpose of the “Agricultural Reinsurance”
Joint Stock Company is to contribute to the
development of the insurance and financial sector
by providing with reinsurance service.
Purpose

6. © CommNet 2013
Goals
• Improve insurance system upon the protection of the herders’
livelihood from the Dzud risk.
• Be the base to develop reinsurance system in Mongolia.
• Be the leading company, which shapes a modern/contemporary
trend for reinsurance sector’s development in Mongolia.
• Strengthen the financial capacity of the domestic reinsurance sector.
• Operate to ensure the growth of company’s sustainable
development based upon the permanent existence on the insurance
market.
• Expand the international business relations and hold land-bridge
links between international reinsurers.
• Deliver a fast service for agricultural insurance products, which
fulfills customer’s needs within the short amount of time.
• Train highly skilled human resource for the insurance sector.

7. © CommNet 2013
Institutional Structure of the Company
Stakeholder Steering
Committee CEO
Asset Management and
Compensation Department
Business Development and
Project Department
Underwriting Department
Audit
Commission
Nominating
Committee
Remuneration
Committee
Ministry of
Finance
Deputy CEO
Internal Auditor
Secretary of
Steering Committee
General Lawyer
Finance and Administration
Department

8. © CommNet 2013
Global Reinsurers
Participating Insurers
Reinsurance
Contract
Policyholders -
Herders
IBLI Policy
Insurance Brokers
- Banks
Retrocession
Contract
Retrocession Indemnity
Reinsurance Indemnity
IBLI Indemnity
Reinsurance Premium
Retrocession Premium
IBLI Premium
National
Statistical Office
“Agricultural Reinsurance”
JSC Livestock
Mortality

9. © CommNet 2013

10. © CommNet 2013
• Index based livestock insurance is protecting herders from
Dzud disaster which refers to index based and standard
insurance product.
• In other words, principle of this insurance has been developed
how the insured loss is determined based on indirect loss
indicator includes data regarding losses on the region and
factors that affect the loss.
• There is not any experience that index based livestock
insurance in the world. Thus index based livestock insurance
project has tentatively been implemented successfully since
2005, and has implemented in the whole of Mongolia since
2012. Therefore this project has been continuing under the
roof of the Agricultural Reinsurance JSC since 2015.

11. © CommNet 2013
Index based insurance is commercial product based on the market.
It has following features:
 Insurance indemnity is paid to the herders by basing on the total
adult livestock mortality rate at Soum level for each types rather
than at livestock mortality rate of individual household in case of
exceeding thresholds sets by the government.
 A herder could insure their livestock by market price
 Premium rates are heterogeneity for each soum and each
species that depend on local feature
 Threshold is 5 or 6% depends on historical mortality volumes for
each Aimags.

12. © CommNet 2013
Risk Layers
Mid-Layer Risk
/Participating insurers
and AgRe Mongolia/
Herders
Above Threshold
2 /25% or 30%
Mortality rate/
Threshold 1 to
Threshold 2
0-Threshold 1
/5% or 6%
Mortality rate/
Upper-Layer Risk
/Government of Mongolia
Thru AgRe Mongolia/

13. © CommNet 2013
Insurance Sales Season
2015
Apr Jun Jul Aug Dec Apr Jun Jul Aug Dec
2016
2016 Sales
Season
2017 Sales
Season
2016 Indemnity
payment
2017
Coverage
Period2016 Coverage
Period
2015 Indemnity
payment

14. © CommNet 2013
2016 IBLI
Threshold
№ Aimag
First
Threshold
Second
Threshold
Average Premium
Rate
1 Bayan-Ulgii 5 25 3.60
2 Dornogobi 5 25 2.60
3 Dornod 5 25 3.07
4 Selenge 5 25 2.43
5 Khovd 5 25 3.56
6 Orkhon 5 25 3.09
7 Darkhan-Uul 5 25 1.76
8 Gobisulber 5 25 3.22
9 Arkhangai 5 30 4.70
10 Bulgan 5 30 3.75
11 Sukhbaatar 5 30 4.18
12 Тuv 5 30 4.33
13 Khuvsgul 5 30 3.38
14 Khentii 5 30 3.68
15 Ulaanbaatar 5 30 4.07
16 Bayankhongor 6 30 6.72
17 Gobi-Altai 6 30 5.57
18 Dundgobi 6 30 4.83
19 Zavkhan 6 30 5.86
20 Uvurkhangai 6 30 5.64
21 Umnugobi 6 30 4.31
22 Uvs 6 30 4.70
Average 4.31

15. © CommNet 2013

16. © CommNet 2013
The parliament of Mongolia has ratified the “Index based livestock
insurance law” on June 13, 2014.
This law is reflected in aspects of the following principles:
• Principles of insurance, threshold of mortality rate, determination of
insurance event, determine the level of risk, risk allocation, indemnity
payment;
• IBLI and reinsurance activities
• IBLI fund and its type
Background for Index Based Livestock Insurance Law

17. © CommNet 2013
3. Results on Index Based Livestock Insurance

18. © CommNet 2013
Number of Policyholders, 2006-2015 он
2,422
3,705 4,047
5,628
6,977
10,909
15,988
19,445
14,331
10,317
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

19. © CommNet 2013
-
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1,400.0
1,600.0
1,800.0
2,000.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
107.7 163.1 176.6
282.2
622.8
847.0
1,496.8
1,799.0
1,374.1 1,313.4
1.1
378.8 389.7
1,858.9
108.3 112.0
278.9
40.6 62.8
Premium volume /million.tugrugs/
Indemnity volume /million.tugrugs/

20. © CommNet 2013
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