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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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Although weather shocks are a major source of income fluctuation, most of the world's poor lack insurance coverage against them. Absence of formal insurance contributes to poverty traps, as investment decisions are conflicted with risk management ones: risk-averse farmers tend to underinvest and produce lower yielding yet safer crops. In the past few years, weather index insurance has gained increasing attention as an effective tool to provide small-scale farmers coverage against aggregate shocks. However, there is little empirical evidence about its effectiveness. This paper studies the effect of the recently introduced rainfall-indexed insurance on farmers' productivity, risk management strategies, as well as per capita income and expenditure in Mexico. The identification strategy takes advantage of the variation across counties and across time in which the insurance was rolled-out. The analysis finds that the presence of insurance in treated counties has significant and positive effects on maize productivity. Similarly, there is a positive association between the presence of insurance in the municipality and rural households' per capita expenditure and income, although no significant relation is found between the presence of insurance and the number of hectares destined for maize production.

Administrative Costs --- Adverse Selection --- Agricultural Development --- Agricultural Insurance --- Agricultural Land --- Agricultural Policy --- Agricultural Production --- Agricultural Productivity --- Agricultural Technology --- Agriculture --- Basis Risk --- Beneficiaries --- Cash Crops --- Cash Transfer Programs --- Cash Transfers --- Checks --- Claims --- Communal Land --- Consumption Smoothing --- Contracts --- Counterfactual --- Covariate Shocks --- Coverage --- Credit --- Crop Insurance --- Crop Varieties --- Crops & Crop Management Systems --- Debt Markets --- Development Economics --- Drought --- Durable --- Durable Assets --- Economics --- Effects --- Efficiency --- Equity --- Exchange --- Expenditure --- Extreme Poverty --- Famine --- Farmers --- Female Labor --- Female Labor Force --- Finance and Financial Sector Development --- Financial Support --- Guarantee --- Household Head --- Household Income --- Household Survey --- Illiteracy --- Implicit Contracts --- Incentives --- Income --- Income Smoothing --- Indemnity --- Indemnity Payments --- Infant Mortality --- Information --- Insurance --- Insurance & Risk Mitigation --- Insurance Company --- Insurance Contracts --- Insurance Coverage --- Insurance Market --- Insurance Policies --- Insurance Premiums --- Insurance Product --- Insurances --- Insurers --- Interest --- International Bank --- Investment --- Investment Decisions --- Irrigation --- Labor --- Labor Force --- Labor Policies --- Lack of Infrastructure --- Land Quality --- Land Size --- Loans --- Loss --- Malnutrition --- Management --- Market --- Market Failures --- Measures --- Minimum Wages --- Moral Hazard --- Mortality --- Organizations --- Outcomes --- Policies --- Policyholders --- Political Economy --- Poor --- Poor Rural Household --- Poverty --- Poverty Index --- Poverty Levels --- Poverty Reduction --- Premiums --- Private Insurance --- Private Insurance Companies --- Production --- Production of Cash Crops --- Productivity --- Productivity Growth --- Profit --- Programs --- Property Rights --- Rates --- Real Income --- Reinsurance --- Reinsurance Markets --- Rights --- Risk --- Risk Exposure --- Risk Management --- Risk Management Strategies --- Risk Sharing --- Risk Sharing Arrangements --- Risk Taking --- Risk Transfer --- Risks --- Running Water --- Rural --- Rural Areas --- Rural Household --- Rural Level --- Rural Population --- Rural Poverty --- Rural Poverty Reduction --- Rural Settings --- Social Protections and Labor --- Standards --- Supply --- Theory --- Training --- Transfer Programs --- Transfers --- Value --- Wages