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The policy brief examines Mongolia's Index-Based Livestock Insurance (IBLI) project, a World Bank-supported initiative designed to protect herders from mass livestock losses caused by 'dzuds' (extreme weather). By using aggregated mortality indices rather than individual loss assessments, the program reduces transaction costs and provides financial security to sparsely populated areas. The system employs a tiered response: herders absorb losses under 6%, private Livestock Risk Insurance covers losses between 6-30%, and Government Catastrophic Coverage handles losses over 30%. While the program has successfully insured millions of animals and provided critical payouts, the brief emphasizes that insurance must be part of a broader strategy including sustainable grazing and veterinary improvements. Key success factors identified include the use of long-term census data, public education to drive demand, and the maintenance of affordable premiums through public-private partnerships.

This briefing describes the Index-Based Livestock Insurance (IBLI) project in Mongolia, a public-private partnership supported by the World Bank. The program uses an index of aggregated criteria, such as regional livestock mortality rates, to trigger payouts rather than individual loss assessments. This approach aims to provide financial security to herders facing climate-related risks, specifically 'dzuds' (extreme weather events), while encouraging the adoption of sustainable grazing practices to build long-term resilience.

This case study examines the implementation of the Index-Based Livestock Insurance Project in Mongolia, designed to mitigate the financial devastation caused by dzuds (severe winter weather). The project transitions the country from reactive, ex post disaster funding to a proactive, ex ante risk management strategy using mortality-based indices rather than individual loss assessments.