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Zonder onderwerpscode: wereldeconomie, ontwikkelingsproblematiek

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Zonder onderwerpscode: wereldeconomie, ontwikkelingsproblematiek

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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.

Banks and Banking Reform --- Debt Markets --- Excess of loss reinsurance --- Finance and Financial Sector Development --- Hazard Risk Management --- Insurance --- Insurance and Risk Mitigation --- Insurance companies --- Insurance industry --- Insurance Law --- Insurance law --- Insured losses --- Interest rates --- Law and Development --- Private insurance --- Risk assessment --- Risk management --- Urban Development

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This paper has been prepared for policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of governments of developing countries in the aftermath of natural disasters, while protecting their long-term fiscal balances. It analyzes various aspects of emergency financing, including the types of instruments available, their relative costs and disbursement speeds, and how these can be combined to provide cost-effective financing for the different phases that follow a disaster. The paper explains why governments are usually better served by retaining most of their natural disaster risk while using risk transfer mechanisms to manage the excess volatility of their budgets or access immediate liquidity after a disaster. Finally, it discusses innovative approaches to disaster risk financing and provides examples of strategies that developing countries have implemented in recent years.

Banks & Banking Reform --- Capital market development --- Debt Markets --- Developing countries --- Disbursement --- Emergency financing --- Environment --- Finance and Financial Sector Development --- Financial institutions --- Financial instruments --- Global capital --- Global capital market --- Government budget --- Hazard Risk Management --- Indebtedness --- Insurance --- Insurance & Risk Mitigation --- International bank --- International financial markets --- Liquidity --- Natural disaster --- Natural Disasters --- Public investment --- Returns --- Risk management --- Risk neutral --- Urban Development

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This paper aims to assist policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of developing country governments in the aftermath of natural disasters, while protecting their long-term fiscal balance. Contingent credit is shown to increase the ability of governments to self-insure by relaxing their short-term liquidity constraints. In many situations, contingent credit is most effectively used to facilitate risk retention for middle layers, with reserves used for bottom layers and risk transfer (for example, reinsurance) for top layers. Discussions with governments on the optimal use of contingent credit instruments as part of a sovereign catastrophe risk financing strategy can be guided by the output of a dynamic financial analysis model specifically developed to allow for the provision of contingent credit, in addition to reserves and/or reinsurance. This model is illustrated with three country case studies: agricultural production risks in India; tropical cyclone risk in Fiji; and earthquake risk in Costa Rica.

Access to Finance --- Bankruptcy and Resolution of Financial Distress --- Contingent Credit --- Debt Markets --- Developing Countries --- Disaster Risk Financing --- Dynamic Financial Analysis --- Finance and Financial Sector Development --- Financial Intermediation --- Insurance --- Insurance & Risk Mitigation --- Natural Disasters --- Private Sector Development