Paper short abstract:

This paper considers the case of index-based livestock insurance (IBLI) in Mongolia and its failure to materialize as an effective form of pastoral risk management. In order to understand this failure, the paper explores how insurance is utilized and understood by herders.

Paper long abstract:

From 1999 to 2001 and again in 2010 Mongolian pastoralists experienced widespread, catastrophic winter disasters called dzud in which millions of livestock perished and thousands of households abandoned a pastoral lifeway. These events are an outcome of harsh winters and a rapid shift away from state-based pastoral risk management to market and community-based forms of risk management emerging from neoliberal shock therapy policymaking across the post-socialist world. In Mongolia, this shift is best exemplified by a series of World Bank-supported initiatives that aim to financialize risk through banking products such as loans and insurance. This paper considers the case of index-based livestock insurance (IBLI), a form of catastrophic insurance inspired by and linked to weather-based derivatives and catastrophe bonds. Though this unique form of insurance was widely considered innovative by the development industry, it has failed to materialize its promises and, for some, is considered a failure in its goal of effectively managing pastoral risk. In order to understand this failure, this paper will explore how insurance is utilized on the ground and its impact on herding livelihoods. Moreover, this paper will also considered how herders understand insurance and its articulation with Mongolian notions of fate and fortune. Given the limited adoption of index insurance by herders and its failure to reach the poorest, the paper will also briefly discuss the reframing of IBLI as a kind of 'business interruption insurance'.