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**Livestock Insurance in Mongolia**

2. **Investigate in some detail the statistical**<sup>**systemthat isbeingusedtodevelop**</sup> **the census of animals and the reporting of**<sup>**mortality ofanimals.**</sup> This investigation should be conducted with a clear<sup>pictureof how thesedatamight be</sup> used to make insurance payments. A number of<sup>issuesshouldbe investigated:1)</sup> what is the quality of these data? 2) Could the data<sup>be developedat thebag level?</sup> 3) Has the process for developing the data<sup>changedinanysignificantfashionin</sup> the last 30 years? 4) Have the data been used<sup>inthepasttomakeemergency</sup> disaster payments and, if so, is there any evidence<sup>that thiscreatedany</sup> misrepresentation in the data? 5) Given that a census<sup>is taken everyyear,are there</sup> adequate safeguards and accounting systems in place<sup>tomitigatetheopportunity</sup> for manipulating the data? 6) What auditing systems<sup>might beadded toassure that</sup> the data process does not change when a insurance<sup>paymentsarebeingmadeon</sup> the basis of the data? 7) How do herders and others<sup>viewthe qualityof the data?</sup>

**3. Select a sample of sum to offer the mortality**<sup>**indexinsurance.**Initially, the</sup> government could collaborate with the private insurers<sup>and make insuranceoffers</sup> in a select sample of sum. The sample should<sup>beselected with somegeographical</sup> spread in mind. Ideally, the offers would be made<sup>inabout30sum.Giventhat</sup> the mortality data are widely available, it may<sup>bepossibletomakeselecta</sup> representative sum in every aimag to begin the pilot.<sup>Thiswouldgive as much</sup> geographic spread as possible and provide the needed<sup>publicityacrossMongolia</sup> for the concept. Great care should be taken in making<sup>certain thatthe pricethatis</sup> charged reflects the relative risk. The premium<sup>rateschargedherdersandthe</sup> design of the contracts should be consistent with market<sup>principles. Initially,the</sup> government could provide some level of reinsurance<sup>toprivate providesto get</sup> their involvement. Simultaneously, the concept and pilot design should<sup>be</sup> presented to the international capital markets obtaining<sup>their inputand attempting</sup> to get their involvement in offering reinsurance.

4. **Develop an extended education and marketing**<sup>**program.**Anysuccessful pilot</sup> must educate herders about the potential value<sup>anduseof thisinsurance.Some</sup> considerable attention should be paid to an educational<sup>effort.</sup> _5._ **Establish appropriate feedback and monitoring**<sup>**ofthe pilot.**Apilot program</sup> should be designed to allow for learning about the<sup>concept.This learningmust</sup> involve a number of dimensions: a) how have the<sup>privateinsurersrespondto the</sup> opportunity? b) how have the herders responded?<sup>c)areherdersthinkingofand</sup> using informal and formal mechanisms to share<sup>theindex paymentswithinthe</sup> community? d) has the introduction of the index<sup>insurance changedthe data</sup> development process in any significant fashion?

In a pilot test, one may attempt to offset the cost of<sup>theinsurancetoherders</sup> so that herders would just pay the pure premium of<sup>the program.Thiswould require</sup> some budget obviously. Additional financing would be needed for resources<sup>to</sup> examine the issues outlined above and for education<sup>andmarketing.Thus,careful</sup> thought must be made as to the scope of a pilot<sup>and thetotal amountoffunds</sup> available for running such a test.