Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) EUROPE AND CENTRAL ASIA | Kazakhstan | Finance, Competitiveness and Innovation Global Practice | Global Environment Project | Investment Project Financing | FY 2016 | Seq No: 5 | ARCHIVED on 24-Mar-2019 | ISR36398 | Implementing Agencies: Europa Re, Europa Re Key Dates Key Project Dates Bank Approval Date: 08-Apr-2016 Effectiveness Date: 25-May-2016 Planned Mid Term Review Date: 13-Sep-2019 Actual Mid-Term Review Date: -- Original Closing Date: 31-Dec-2019 Revised Closing Date: 31-Dec-2019 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is to assist Kazakhstan with developing a modern catastrophe insurance market infrastructure that will support the launch of affordable, innovative catastrophe insurance products covering the risks of weather extremes. The proposed project activities support GEF’s focus on climate change and more specifically, GEF’s objectives on climate change adaptation. By increasing access to sound catastrophe and weather risk insurance products for millions of people in Kazakhstan, SEECA CRIF is also in line with the GEF strategy on adaptation. By supporting proper catastrophe risk management and risk transfer, SEECA CRIF reduces economic losses at both local and national levels from extreme weather related events, thereby reducing economic vulnerability and contributing toward increased climate resilience at the national level. SEECA CRIF activities are also cross-cutting and collaborative, ensuring the engagement of major stakeholders in Kazakhstan, including the Ministry of Economic Development and Planning, the National Bank, and the Insurance Association. Moreover, because much of the technical work will be focused on establishing complex catastrophe insurance infrastructure and systems, stakeholders will gain the requisite skills and knowledge to better understand catastrophe risk and effectively adapt to such risks and climate change. Furthermore, public awareness of climate change and the benefits of catastrophe and weather risk insurance will be raised through information campaigns and the public discussion of the new Law on Compulsory Catastrophe Insurance, resulting in increased demand for catastrophe and weather risk insurance products. The project also aims to provide national and local governments as well as private individuals with the up-to-date actionable information on the risk of natural disasters faced the communities and certain segments of national economy. The information will be delivered to the decision makers in the form of workshops, risk maps and through interactive education tools available on-line. Although the project has been designed specifically for Kazakhstan, it can be easily replicated in other countries of the region that are adversely affected by climate change through the extension of insurance market infrastructure and insurance services to be developed for Kazakhstan to other markets of the region. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Funding of technical assistance to expand SEE CRIF program to Kazakhstan.:(Cost $5.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory 3/24/2019 Page 1 of 6 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions Over the last 6 months period the project is being on track under successful implementation by Europa RE, the project implementation agency and a specialty catastrophe insurer, with a continued steady progress and some positive outcomes being achieved. The disbursement has reached US$3.16 million, or about 63 percent of the total grant. The current status of project implementation by Europa Re is rated as satisfactory. The Bank carried out technical, procurement and financial supervision of the project and the following progress has been made: Agriculture insurance pilot project: In Spring 2018, a highly innovative credit risk default insurance product has been implemented to insure agricultural commodity producers’ loans against risks of default under loan agreements in case of lower average regional yields. A pilot project has been implemented for borrowers of Agrarian Credit Corporation JSC (ACC). However, the product, when it was originally launched, did not have adequate IT support and the wording of the contract had to be renegotiated with the ACC. Europa Re, therefore, has provided extensive capacity building activities to the agents (staff of Oil Insurance Company (OIC) across 5 biggest branches in the country), which had to be trained as well and the local insurance partner needed to change its business processes to be able to sell the product. To date, about 10,000 ha of crops have been covered with the insurance. The local office of Europa Re is currently in the middle of the sales season and it is expected to see more uptake in the next month. EReagro application: The platform is being tested both, internally and by the insurance partner sales agents. Regional Sales Offices have been engaged into testing as well OIC staff. Potential new insurance programs in preparation are being discussed to cover risks of BankCenterCredit’s property pool against earthquakes. CATMonitor. The platform was launched in Kazakhstan earlier in April 2018. It is currently in its full operation aimed to provide education and raise disaster risk awareness (earthquake risk) among the general public. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Moderate Moderate Moderate Macroeconomic Moderate Moderate Moderate Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Sustainability Low Low Low Fiduciary Low Low Low Environment and Social Low Low Low Stakeholders Moderate Moderate Moderate Other Moderate Moderate Moderate Overall Moderate Moderate Moderate Results PDO Indicators by Objectives / Outcomes 3/24/2019 Page 2 of 6 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Assist Kazakhstan with developing a modern catastrophe insurance market infrastructure IN00683157 ►Insurance market infrastructure made available for use to local insurance companies in support of catastrophe risk insurance products. (Number) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 2.00 Date 21-Apr-2016 09-May-2018 20-Mar-2019 31-Dec-2019 In May 2018, one local SECA CRIF project partner insurance company launched sales of weather risk credit default product developed under the project. The sales were carried out using the web-based Comments: underwriting platform, weather risk data and pricing algorithms developed under the SECA CRIF project. We expect at least 2-3 more local insurers to join the program before the end of 2019. Consumers are more aware of disaster risks and the mitigating role of insurance IN00683156 ►CatMonitor - a web-based disaster risk information tool for homeowners is launched (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 03-Apr-2018 03-Apr-2018 31-Dec-2019 The indicator measures the success of project in providing local homeowners with actionable and Comments: scientifically proven information about the vulnerability of their dwellings to EQ risk. TA is provided to government/NBK in developing enabling insurance regulatory framework for cat risk IN00683125 ►Completion of TA (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 01-Dec-2015 24-Jul-2018 24-Jul-2018 31-Dec-2018 The indicator measures the success of the project in assisting the local insurance market regulator - the National Bank of Kazakhstan - with examples of best international regulatory practices for catastrophe insurance risk, assessment of the current local regulatory and market practices, and recommendations on Comments: how the regulations can be improved. Intermediate Results Indicators by Components Funding of technical assistance to expand SEE CRIF program to Kazakhstan. IN00683158 ►Catastrophe risk insurance products are offered online.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No Yes Yes Date 21-Apr-2016 11-Sep-2018 20-Mar-2019 31-Dec-2019 The indicator measures whether products developed by ERE can be purchased by interested consumers Comments: online. 3/24/2019 Page 3 of 6 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) IN00683159 ►Online claims management system is launched.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No Yes Yes Date 21-Apr-2016 07-Feb-2018 20-Mar-2019 30-Sep-2019 IN00683160 ►Insurance premium of basic catastrophe insurance products are affordable for a good risk consumer. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 7.00 1.50 2.00 1.50 Date 21-Apr-2016 11-May-2018 01-Mar-2019 30-Sep-2019 The premium rates for the credit default insurance products for a low risk consumer vary between 1.5-3 Comments: percent of sum insured. IN00683161 ►Online automated sales, underwriting and pricing system is launched.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No Yes Yes Date 21-Apr-2016 07-Feb-2018 20-Mar-2019 30-Sep-2019 The online automated sales, underwriting and pricing system has been already but has not been launched Comments: yet. Its launch is expected in the spring 2019. IN00683162 ►Cat risk insurance products developed under the project are available through local insurance industry in Kazakhstan.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 11-Sep-2018 20-Mar-2019 31-Dec-2019 IN00683163 ►Number and type of new cat risk insurance products developed. (Number) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.00 2.00 2.00 Date 21-Apr-2016 07-Feb-2018 20-Mar-2019 30-Sep-2019 IN00683164 ►Insurance agents in the market offer catastrophe risk insurance developed under SECA CRIF project. (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No Yes Yes Date 21-Apr-2016 11-Sep-2018 20-Mar-2019 31-Dec-2019 Under the pilot the products have been sold to consumers directly by the local partner insurance company without using the services of intermediaries. However, in 2019, to expand the sales of products, it is Comments: envisaged that insurance agents will be widely used. IN00683165 ►Number of women insured against natural disasters as % of total insured.(Percentage) (Percentage, Custom) 3/24/2019 Page 4 of 6 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 50.00 Date 21-Apr-2016 07-Feb-2018 07-Feb-2018 30-Sep-2019 IN00683166 ►Appropriate legislation and risk-based regulatory framework for catastrophe risk products is developed.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 04-May-2018 20-Mar-2019 31-Dec-2019 IN00683167 ►Number of insurance companies selling catastrophe insurance products through insurance market infrastructure developed under the project.(Number) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.00 1.00 2.00 Date 21-Apr-2016 09-May-2018 20-Mar-2019 31-Dec-2019 IN00683168 ►CatMonitor custom-tailored for Kazakhstan is made available online and regularly maintained.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 11-Sep-2018 20-Mar-2019 30-Sep-2019 The CatMonitor has been successfully launched and is now available for use in Russian and English from Comments: Europa Re website. IN00683169 ►Actuarial and probabilistic risk models in support of product pricing have been developed.(Yes/No) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 21-Apr-2016 07-Feb-2018 07-Feb-2018 30-Sep-2019 IN00683170 ►Demand boosting measures have been carried out as a result of technical assistance provided to government/insurance regulator under the project. (Number) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No Yes Yes Date 21-Apr-2016 11-Sep-2018 20-Mar-2019 31-Dec-2019 The indicator measures any actions carried out directly under the SECA CRIF project or by project partners (such as government or insurance companies) to boost the demand for insurance products Comments: developed under the project. Data on Financial Performance 3/24/2019 Page 5 of 6 Public Disclosure Copy The World Bank Implementation Status & Results Report Kazakhstan: Southeast Europe and Central Asia Catastrophe Risk Insurance Facility (P152230) Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P152230 TF-A1934 Effective USD 5.00 5.00 0.00 3.16 1.84 63% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P152230 TF-A1934 Effective 20-Apr-2016 20-Apr-2016 25-May-2016 31-Dec-2019 31-Dec-2019 Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 3/24/2019 Page 6 of 6