Index-based livestock insurance

The latest issue of Access Finance has a short note on an innovative index-based livestock insurance pilot in Mongolia.

An index-based insurance product to indemnify herders based on the mortality rate of adult animals in a given area was recommended. The index-based livestock insurance (IBLI) policy pays indemnities whenever the adult mortality rate exceeds a specific threshold for a localized region...

The proposed insurance program… combines self-insurance, market-based insurance and social insurance. Herders retain small losses that do not affect the viability of their business, while larger losses are transferred to the private insurance industry and only the final layer of catastrophic losses is borne by the government.

Update: a previous post on index-based humanitarian disaster insurance.